January 16, 2026 · By Mariusz Kurylo · Bond Market Collapse

PIMCO and Amundi Pivot Away from U.S. Bonds: Inside the 'Sell America' Trade

Published: January 16, 2026 | By Mariusz Kurylo

In January 2026, a Financial Times investigation and subsequent reporting by Bloomberg and Reuters revealed that several of the world's largest bond investors — including PIMCO, Europe's Amundi, and several major sovereign wealth funds — had quietly reduced their exposure to U.S. dollar assets over the preceding months. The coordinated repositioning, which financial analysts began calling the "Sell America" trade, represented a meaningful shift in the global investment landscape.

PIMCO, the Newport Beach, California-based investment manager with over $1.9 trillion in assets under management, told the Financial Times in January 2026 that it had reduced its U.S. Treasury allocation and increased positions in European and select emerging market sovereign bonds. PIMCO's chief investment officer cited "fiscal trajectory concerns" and "geopolitical uncertainty" as primary drivers of the reallocation.

Why the World's Biggest Bond Investors Are Diversifying Away from the U.S.

The reasons for the shift are multiple, and they reinforce each other. Reuters reporting from January 2026 identified four primary drivers:

1. Fiscal sustainability concerns. With U.S. national debt at $38 trillion and growing, and annual interest costs crossing $1 trillion, institutional investors are modeling scenarios in which the U.S. debt trajectory becomes self-reinforcing. The implication is that future U.S. bonds must offer higher yields to compensate for the fiscal risk premium.

2. Reduced trade surplus recycling. For decades, countries with large trade surpluses with the United States — Japan, China, Germany, South Korea — recycled a significant portion of their dollar earnings back into U.S. Treasury bonds. As tariffs disrupted trade flows, those surplus dollars shrank, reducing the automatic demand for Treasuries from trade partners.

3. Political risk around the Federal Reserve. Bloomberg reported in January that Trump administration signals about Fed leadership were being closely monitored by foreign investors. Central bank independence is a key criterion for sovereign bond investment; any perceived erosion of that independence increases the risk premium foreign investors demand.

4. Currency hedging costs. For Japanese and European investors, buying U.S. bonds requires hedging the dollar exposure back to yen or euros. As those hedging costs rose with currency volatility, the net return on U.S. bonds for foreign investors fell sharply — in some cases to negative real yields.

Amundi's Public Repositioning

Amundi, Europe's largest asset manager with approximately $2 trillion under management, was more explicit than most. Bloomberg reported that Amundi's CIO publicly stated in January 2026 that the firm had "meaningfully reduced" its U.S. duration exposure and was finding better risk-adjusted value in European investment-grade bonds and select Asian sovereign debt.

"The combination of fiscal dynamics and geopolitical uncertainty in the United States creates a risk premium that we believe is not yet fully reflected in current Treasury yields," Amundi's statement, quoted by Bloomberg, read. "We are repositioning accordingly."

For Wall Street professionals, statements like this from major institutional investors are significant precisely because these firms typically move quietly — when they speak publicly about repositioning, the actual portfolio changes are already complete.

What "Sell America" Means for U.S. Borrowing Costs

The practical implication of the "Sell America" trade is higher U.S. borrowing costs. When major buyers of Treasury bonds reduce their purchases, the Treasury must offer higher yields to attract alternative buyers — domestic pension funds, money market funds, or smaller international investors.

Bond Buyer estimated in January 2026 that every 0.25% increase in the average yield the government paid on its debt added approximately $95 billion to annual interest expense at current debt levels. A sustained "Sell America" dynamic that pushed yields up by 0.5–1.0% would add $190–$380 billion to the annual deficit — a self-reinforcing fiscal spiral.

The Wall Street Journal's bond market team noted that the 30-year Treasury yield was approaching 5% — the level Jamie Dimon and other analysts had flagged as a potential trigger for more serious market stress.

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Sources: Financial Times, Bloomberg, Reuters, The Wall Street Journal, Bond Buyer

Disclaimer: This article is for informational and educational purposes only. It does not constitute financial, legal, or investment advice.