The EU owns $8 trillion in Treasurys
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What is the significance of the EU owning $8 trillion in Treasurys?
The phrase you're looking for here, gang, is framework relief rally. From American Public Media, this is Market Plans. In Los Angeles, I'm Kai Risdell. It is Wednesday, today, 21 January. Good as always to have you along, everybody. Well, in the space of something like three, maybe four hours at the World Economic Forum in Davos, Switzerland today, President Trump went from having to have Greenland, with all that that having implies, to an as-yet-undefined framework for some kind of as-yet-undefined agreement with NATO about the fate of the world's biggest island. That's the news. The reaction in this program's neck of the woods... was predictable. Markets loved it.
How might Europe leverage U.S. Treasurys in geopolitical situations?
Stocks, that is. Bond traders were a bit more blasé, which is interesting because U.S. treasuries, those government bonds and bills that basically the whole world owns at least a little bit of, are among the possible ways that Europe might fight back should the president's mood change. Marketplace's Aubrey Beneshour gets us going. Europeans own at least $8 trillion worth of U.S. Treasuries. Selling them off would make it harder and more expensive for the U.S. to borrow money to fund all that spending. There is, however, a problem.
These assets are not held predominantly by European governments.
What challenges do European governments face in accessing their Treasurys?
They're held by private investors.
Josh Lipsky at the Atlantic Council says European governments don't have a quick way of forcing private investors to sell their treasuries. Then there's another minor issue. It would not be in Europe's own economic interest to do something like this. Daniel McDowell is at Syracuse University. U.S. treasuries back a lot of financial instruments around the world. Any mass sale of treasuries like that would likely cause severe disruptions that would impact not just the U.S., it would also impact European banks and the entire global economy. And on top of that, a lot of Europeans would lose a lot of money because it'd basically be a mega flash sale of U.S. treasuries.
What impact would a mass sale of Treasurys have on the global economy?
Luis Alvarado is at the Wells Fargo Investment Institute.
When everybody is going through the exit door at the same time, then it's impossible to get out. And you're going to have to lose a lot in value if you're trying to all sell at the same time.
Plus, this would mess with currency markets, make the euro appreciate European goods more expensive. But on the other hand, money isn't everything. Nicolas Varon is a senior fellow at the Peterson Institute for International Economics.
I think we're well past the point where considerations have to be only of financial and economic nature without consideration of national security.
So let's say Europe did decide to burn it all down, force the sell-off of treasuries. Where would it put all that money? There is no alternative.
How are U.S. Treasurys related to global financial stability?
Again, Daniel McDowell at Syracuse. There's no other market capable of absorbing that much capital in a short time without major disruptions. And if European investors, like all investors, want to be where the money is, that leads right back to the U.S. John Canale is at TIAA Wealth Management. The U.S. is the center of AI. We have superior growth tracks, superior productivity. There are lots of other pain points Europe could hit before selling off treasuries, from tariffs to going after U.S. tech companies. So an official move to unload U.S.
What are the recent quarterly earnings trends in the airline industry?
debt looks unlikely. What we might see, though, says the Atlantic Council's Josh Lipsky, is an unofficial, gradual, organic backing away from that debt.
There is a move out there, and I think it was already underway before what happened in the past week, to find alternatives to diversify your portfolio.
Not a wave, not a catastrophe, just a gradual waning of U.S. financial importance. In New York, I'm Sabri Beneshour for Marketplace. That last bit there, that was important. Wall Street today, as I said, a geopolitical relief rally. We will have the details when we do the numbers.
Corporate news is our next destination because the economy never does stop, you know.
How are Medicaid changes affecting primary care doctors?
American Commercial Aviation, the big name premium airlines anyway, are doing quite nicely.
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Chapters
8 chapters
1
What is the significance of the EU owning $8 trillion in Treasurys?
0:02–1:01
2
How might Europe leverage U.S. Treasurys in geopolitical situations?
1:01–1:39
3
What challenges do European governments face in accessing their Treasurys?
1:39–2:22
4
What impact would a mass sale of Treasurys have on the global economy?
2:22–3:12
5
How are U.S. Treasurys related to global financial stability?
3:12–3:46
6
What are the recent quarterly earnings trends in the airline industry?
3:46–4:56
7
How are Medicaid changes affecting primary care doctors?
4:56–5:36
8
What are the economic implications of adopting cover crops for farmers?
5:36–25:56