▼ Financial Times reported: Canadian and Danish pension funds are withdrawing or suspending investments in the U.S., citing concerns over Trump's unpredictable policy decisions.
▼ This is a noteworthy shift, particularly considering the extent to which the U.S. stock market depends on global investors. As of early 2025, foreign investors held a record 18% of U.S. stocks.
▼ From this perspective: In 1960, foreigners held only 2% of U.S. stocks, rising to 7% by 2000, and now it stands at 18%.
▼ The actions of Canadian and Danish pension funds are an important indicator. The marginal buyers of U.S. assets are now global capital. Withdrawals signal a reversal in the flow of funds that previously helped suppress U.S. market volatility and inflate valuations.
▼ Globally, 49% of foreign holdings of U.S. stocks come from Europe, and 25% from American investors. Europe's macroeconomic situation is rapidly deteriorating. If European pension allocators begin reallocating funds to "home bias" or safer regions, the U.S. economy may experience multiple contractions without any changes in outcomes, simply due to divestment on the demand side.
▼ Coupled with quantitative easing, rising geopolitical risk premiums, and structural deglobalization, the U.S. market faces new risks: the risk lies in the chain reaction of foreign divestment, which will occur faster than domestic purchasing power can compensate.
▼ Last week, U.S. investment-grade bonds saw a $9.8 billion outflow in a single week, the largest since the birth of COVID-19, and the fourth-largest outflow in history. This is not just a simple asset rotation but an alarm for the escalation of systemic credit stress in the U.S. Historical data shows that such large-scale outflows only occur during major liquidity crises: March 2020 (COVID), end of 2008 (global financial crisis), and the taper tantrum period.
▼ The deeper issue is not just capital flowing out of the U.S., but a signal: America's soft power premium is declining in real time. What were once considered "risk-free" U.S. assets are now becoming "strategic leverage collateral." America's strategic realism demands capital controls, inflation, and financial repression, none of which are attractive conditions for global investors. As foreign buyers withdraw from a market that no longer provides actual returns or trust, the Federal Reserve will be forced to become a marginal buyer of Treasury bonds.
▼ It is absurdly laughable to think that the current U.S. government is managing anything. Yes, there is Stephen Miller's plan. But just from the chaotic messages constantly coming from Bessette, Navarro, Stephen Miller, Hassel, and Lutnick in the media, their statements are clearly not coordinated beforehand. All these policy changes are reactive, lacking any planning or management.
▼ Therefore, the already highly emotional U.S. market has no stability left, only turmoil.
▼ Since last Wednesday, the following has happened in the U.S.:
▶ Imposing "reciprocal tariffs" on the world (including penguins)
▶ Removing "reciprocal tariffs," reduced to 10%
▶ 34% tariff on China
▶ 104% tariff on China
▶ 125% tariff on China
▶ 145% tariff on China
▶ Exemption for electronics
▶ Reopening of electronics
▶ Possible separate imposition of pharmaceutical tariffs
▶ Trump just announced that electronics have no exemption but he hasn't figured out how to tax them yet
▼ If you are the CFO of a Fortune 500 company, would you approve any new investments in such an unstable country?
▼ The world is beginning to distance itself from U.S. sovereign risk, but this distancing is not comprehensive; it is a silent, systemic shift. When the U.S. reserve currency is sold off and its Treasury yields rise, this is not a signal of capital fleeing U.S. risk, but rather a signal that U.S. risk is defined by the reserve itself.
▼ Looking at Figure 3 from Bloomberg data, the U.S. Dollar Index (DXY) and the 10-year U.S. Treasury yield are moving inversely, a rare macroeconomic misalignment. When the 10-year U.S. Treasury yield continues to rise (white line) while the dollar continues to fall (blue line), countries under pressure may liquidate U.S. Treasuries for foreign exchange defense or capital inflow, which will further push up yields while depressing the dollar. If the market believes the Fed will be forced to monetize deficits (i.e., implicit quantitative easing or yield curve control), investors holding U.S. Treasuries will demand higher yields, and the dollar will weaken due to anticipated dilution.
▼ This is the market's advance pricing of U.S. policy disruptions or U.S. credit events, signaling tightening liquidity or the ultimate monetary policy response in the U.S., often ending with some form of forced intervention.
▼ In short, this is a slow-motion replay of September 2008, but with less trust, amplified leverage, and the final buyer (the Fed) having no credibility either.
Original article: https://www.toutiao.com/article/1829344373747712/
Disclaimer: This article solely represents the author's viewpoint.