NEW YORK — Global investors accelerated a broad shift out of U.S. assets this week as a sharp drop in the dollar, a selloff in Treasuries and a spike in gold prices converged into what traders are calling a renewed “sell America” trade. The move followed President Donald Trump’s latest threat to impose new tariffs on several European partners unless they back his push for U.S. control over Greenland, prompting a reassessment of U.S. risk across currencies, bonds, equities and commodities as of 21 January 2026. Market pricing now reflects growing concern that Washington’s tariff brinkmanship with the European Union could become a more persistent feature of U.S. policy, forcing global allocators to revisit long-standing assumptions about the dollar’s dominance and Treasuries’ safe‑haven status.
Dollar slide signals renewed policy risk
The ICE U.S. Dollar Index, which tracks the currency against a basket of major peers, fell around 1% in early New York trading on Tuesday, putting it on course for its steepest one‑day percentage decline since a tariff announcement in April that also triggered a selloff in U.S. assets. A drop of that magnitude in a benchmark index that typically moves in fractions of a percent underscores how quickly confidence can shift when policy shocks challenge the perception of U.S. macroeconomic stability. The euro strengthened roughly 0.7% against the dollar over the same window, while traditional safe‑haven currencies such as the Swiss franc and Japanese yen drew renewed demand from asset managers trimming dollar exposure.
Currency strategists note that the move stands out because it is driven less by cyclical data and more by political and trade uncertainty around a core U.S. ally bloc. The immediate trigger has been the tariff threat tied to Greenland, but the reaction also reflects cumulative fatigue after years of tariff announcements and reversals that complicate hedging and capital budgeting. For reserve managers and large real‑money accounts, a perception that trade policy may remain volatile encourages broader diversification into non‑U.S. currencies, reinforcing selling pressure on the dollar beyond the initial news shock.
Treasuries lose some safe-haven appeal
U.S. government bond prices fell on Tuesday, pushing yields higher in a move that ran counter to the usual pattern of investors seeking Treasuries during episodes of geopolitical stress. The selloff reflects a reassessment of U.S. policy risk rather than a simple growth scare: if trade tensions with Europe deepen, bond investors face greater uncertainty over inflation, fiscal deficits and the long‑run trajectory of U.S. borrowing needs. Higher yields, particularly at the intermediate and long end of the curve, translate into tighter financial conditions at the margin, complicating the backdrop for risk assets that had leaned on low rates and abundant liquidity.
The move also raises questions about the status of Treasuries as the default global hedge for portfolio risk. When bond prices fall at the same time as equities, balanced portfolios lose some of the diversification benefit that has underpinned standard 60/40 allocations for decades. For foreign holders, who already face currency losses as the dollar declines, a parallel rise in yields reduces total returns and can accelerate decisions to rotate into other sovereign markets or cash, amplifying the “sell America” narrative now circulating on trading desks.
Gold and other havens surge on safety bid
Gold prices surged to fresh record highs this week as investors sought protection from escalating trade and geopolitical tensions linked to the Greenland dispute. Spot gold climbed roughly 1–1.5% on Monday to trade above 4,660 dollars per ounce, after briefly touching an intraday peak near 4,690 dollars, while U.S. futures for February delivery posted similar percentage gains in early Asian and European hours. Those levels mark new nominal records and extend a multi‑month rally driven by a combination of low real yields, persistent inflation uncertainty and recurring political shocks that undermine confidence in fiat assets.
Safe‑haven demand has also lifted other traditional shelters, including the yen and Swiss franc, which typically attract flows when investors cut exposure to riskier currencies and equities. In this episode, the rotation looks particularly concentrated, with flows explicitly framed as a hedge against U.S. political and policy uncertainty rather than a generalized global slowdown. For institutional portfolios, gold’s lack of credit risk and its historical role as a store of value make it a useful offset to both currency volatility and concerns about the long‑term path of U.S. fiscal and trade policy.
Equities and risk assets absorb the shock
U.S. stock benchmarks registered some of their sharpest losses in months as the tariff rhetoric intensified, adding to declines that had already begun in overseas markets. On Tuesday, the S&P 500 fell by more than 2% in regular trading, its first drop of that size since October, while the Dow Jones Industrial Average shed more than 700 points and the Nasdaq Composite slid by over 1%. The Cboe Volatility Index, a widely watched gauge of expected equity swings, jumped to its highest level since November, signaling a meaningful repricing of near‑term risk.
The selling was not confined to Wall Street. European indices, including the Stoxx 600, extended recent losses with declines of around 1% intraday, and risk appetite deteriorated across Asia following the U.S. holiday weekend. Futures on major U.S. benchmarks had already turned lower in overnight trading, with S&P 500 contracts down nearly 1.8% and Dow futures off about 1.6%, indicating that the shock was global in scope rather than a localized U.S. event.
Credit and crypto markets also showed signs of stress, though the patterns varied by asset class. Corporate credit spreads widened modestly, reflecting greater compensation demanded for holding riskier debt, even as the absolute level of yields moved higher with Treasuries. In digital assets, leading tokens such as bitcoin weakened over the extended weekend, with price declines coinciding with the broader shift away from U.S. risk and dollar‑linked trades.
Tariff brinkmanship and the “sell America” thesis
The immediate catalyst for the latest wave of selling is a new tariff threat tied to the long‑running dispute over Greenland’s political status. Over the weekend, President Trump pledged to impose a 10% levy from 1 February on a group of European nations, rising to 25% by 1 June, unless they support the U.S. bid to gain control over the Arctic territory. In response, European Union representatives convened an emergency meeting to discuss potential countermeasures, signaling that a tit‑for‑tat escalation remains a live risk as of today.
That backdrop has revived the “sell America” thesis first articulated when broad U.S. tariffs were rolled out last April, encouraging global investors to cut exposure to U.S. stocks, the dollar and Treasuries in favor of other regions and safe‑haven assets. The core idea is that if the U.S. is perceived as a less predictable trading partner, international capital will demand a higher risk premium to hold U.S. assets, particularly those most sensitive to trade flows and policy decisions. Even if some of the announced measures are later scaled back, repeated episodes of brinkmanship can leave a lasting imprint on asset allocation models, especially for institutions with long‑dated liabilities and limited tolerance for policy‑driven volatility.
Diplomatic signals from Europe suggest little appetite to concede on Greenland, adding another source of uncertainty. Greenlandic officials have reiterated that the territory will not be pressured into a sale and have emphasized adherence to international law, reinforcing the likelihood that the standoff persists beyond the immediate tariff deadlines. For markets, the key question is whether the dispute remains largely symbolic or feeds into a broader reordering of trans‑Atlantic economic ties at a time when supply chains and security alliances are already under strain.
Strategic implications for allocators and policy
For global asset allocators, the latest episode underscores three structural themes: a gradual rebalancing away from concentrated U.S. exposure, an elevated role for real assets such as gold, and a more nuanced view of what constitutes a safe haven. In practice, that can mean more diversified currency baskets, increased allocations to non‑U.S. sovereign bonds with stable policy frameworks, and targeted use of commodities to hedge geopolitical risk. It also highlights the value of scenario analysis that incorporates tariff shocks and diplomatic disputes into stress tests, rather than treating them as idiosyncratic outliers.
For policymakers, the “sell America” narrative carries its own feedback loop. If markets begin to price a durable risk premium into U.S. assets, financing conditions for both the public and private sector can tighten even when domestic economic data remain solid. That dynamic complicates the task of balancing geopolitical objectives with financial stability, particularly when trade measures are deployed with limited warning and without clear end‑points that markets can model.
In the near term, price action suggests that investors are treating the Greenland‑linked tariffs as a live policy path rather than a negotiating tactic that will quickly be withdrawn. The combination of a weaker dollar, softer Treasuries and record‑high gold prices sends a consistent signal that confidence in the traditional U.S. safety trade has been dented, even if it has not yet been fundamentally broken. How quickly that confidence can be rebuilt will depend less on any single headline and more on whether the trajectory of U.S. trade and foreign policy convinces global capital that episodes like this are the exception rather than the rule.
Written by Nick Ravenshade for NENC Media Group, original article and analysis.
Sources: CNBC, Reuters, NBC News, New York Times, Yahoo Finance, RTE, FastBull, Investors Business Daily
Photo: Robb Miller / Unsplash
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