US President Donald Trump’s rhetoric against Federal Reserve Chair Jerome Powell sent shockwaves through global markets on Monday, sparking a sell-off in “safe haven” assets like US dollars and long-term bonds. The 10-year yield surged above 4.4% while the dollar dropped to its lowest level since 2022.
The unusual sell-off, dubbed the “sell America” trade by Wall Street strategists, saw investors pulling back from traditional safe havens and instead flocking to commodities like gold and bitcoin. Gold hit a record high on Tuesday, and bitcoin traded near $91,000 for the first time since February.
Investors are reacting to concerns over US economic stability, including tariffs, slowing growth, and escalating geopolitical tensions. Overseas investors own nearly a third of US equities and more than a quarter of US government debt, but even they are getting nervous about investing in the US market.
“This is not a good spot to be in terms of narrative,” said Ann Berry, founder of Threadneedle Ventures. “No one’s betting against America, but no one’s saying, ‘Oh, we should be going all in over there right now,’ either.”
The sell-off has also seen net outflows of $3.6 billion from US equity ETFs last week, while developed international markets attracted above-average inflows totaling $3 billion. The shift is notable given how heavily US markets rely on foreign capital.
As one market strategist noted, “Wall Street is America’s secret weapon of global dominance.” However, the usual factors that support US assets are being overshadowed by mounting concerns over political and economic instability.
Source: https://finance.yahoo.com/news/wall-street-keeps-warning-of-a-sell-america-trade-heres-why-144332794.html