Swedish Alecta has sold off an estimated $8B of US Treasury Bonds

Original Article ↗ Hacker News Discussion ↗

Scale and Symbolism of the Alecta Sale

  • Multiple comments note ~$8B is tiny versus ~$38T in total US debt (≈1/4000 of the market), calling it “symbolic” or a “rounding error” in isolation.
  • Others argue symbolism matters: it publicly rejects the “risk‑free” assumption of US Treasuries and may signal reduced future buying, not just one sale.
  • Some see it as directionally significant alongside earlier (smaller) Danish divestments, describing it as an “early drop” that might precede a larger shift, though this is acknowledged as uncertain.

Potential for Broader Sell-Off and Market Mechanics

  • Discussion of “first-mover advantage”: if bond values are expected to fall, nobody wants to be last holding US paper.
  • Counterpoint: very large holders can’t exit quickly without heavy discounts (“elephant in the bathtub”), so even early sellers of hundreds of billions would still take losses.
  • Several comments argue that if a broad foreign sell-off began, the Fed would likely respond with large-scale QE to stabilize yields, with associated inflation risk.
  • Others emphasize that each large seller not only finds a buyer now but also removes demand from future US Treasury auctions, putting upward pressure on borrowing costs.

De-Dollarization, Politics, and Trust

  • Some frame this as part of an accelerating de-dollarization trend: references to China (with a link claiming months of sales), possible Indian selling, and BRICS interest in alternatives.
  • US domestic politics are a recurring concern: threats to default or “renegotiate” debt, pressure on the Fed, and general institutional instability are cited as reasons foreign investors might step back.
  • There’s sharp disagreement on US political stability: some insist the US will keep paying; others call US assets “toxic” for the next decades and argue allies should stop funding a now-unreliable partner.

Alternatives to US Treasuries

  • Suggested substitutes include:
    • High-grade European sovereign bonds (Germany, Switzerland, Nordics, etc.), Eurobonds (currently small in volume), and other “more politically stable” issuers.
    • Precious metals, especially gold and silver, including physically backed European ETFs.
    • Non-US corporate bonds and non-US equity indices to diversify away from US risk.
  • Constraints are noted:
    • No other market matches US Treasuries’ depth and liquidity; EU lacks a fully unified, large bond market.
    • Many “safe” bonds have very low yields, making them close to cash.
    • The eurozone and EU themselves face political and fiscal stresses, so they are not a clear-cut safer alternative.

European Strategy and Structural Limits

  • Some argue Europe should deliberately expand Eurobond issuance and gradually rotate out of US debt, both for safety and to stop “financing” US overspending.
  • Others question whether the EU has the political cohesion to mutualize debt at scale, given divergent member risk profiles and rising far-right politics.

Impact on Specific Funds and Countries

  • Norway’s sovereign wealth fund is discussed as a theoretical “serious” risk if it significantly reduced US exposure, especially given its importance to Norway’s budget.
  • But commenters note that rapid, large-scale selling by such funds would damage their own asset values and domestic finances, making a sudden exit unlikely.