Deutsche Bank: Europe Holds $8 Trillion in U.S. Bonds and Stocks, Risk of Weaponizing Capital Amid Tariff Threats

Glonghui January 19｜A strategist from Deutsche Bank stated that former U.S. President Trump issued tariff threats to several European governments over the Greenland issue, raising the possibility that Europe might reduce its holdings of U.S. assets, which would provide support for the euro. George Saravelos, Deutsche Bank's Global Head of FX Research, wrote in a report to clients on Sunday that Europe is the largest "lender" to the U.S., with European countries collectively holding $8 trillion in U.S. bonds and stocks—almost double the total held by the rest of the world. "At a time when the U.S. net international investment position is at a record negative extreme, the interdependence between U.S. and European financial markets has never been higher," Saravelos noted. "What would truly deliver the biggest shock to the market is the weaponization of capital, rather than trade flows themselves."