The “Sell America” trade gained a lot of steam back in April 2025, following Trump’s “Liberation Day” tariffs. Global markets were rattled and recorded some of the worst trading days since the pandemic.
2026 began with a lot of geopolitical tension, with Donald Trump once again being at the center of it all. In particular, his push to “acquire” Greenland has pushed his allies to find solutions to problems they never thought they would.
And the issue is that global markets tend to be connected. Once a country, or worse, a region, begins to lose confidence in another country’s assets, a chain reaction is expected.
That’s when on the 20th of January, stocks, Treasuries, and the dollar all fell together.
Not because growth collapsed or earnings disappointed, but because investors began to reassess how predictable the US really is as the anchor of the global system.
What makes this moment different is not the selloff itself, but what actually triggered it.
Why Greenland changed the tone
Trade tensions are familiar territory for markets. Investors have learned that many tariff threats end in partial rollbacks or long negotiations.
But the push by Donald Trump to assert control over Greenland landed with more intensity among allies.
Greenland is not a marginal trade partner. It sits at the intersection of NATO commitments, European sovereignty, and Arctic security.
When the US threatened tariffs on eight European countries that opposed the move, markets stopped treating the situation as a bargaining tactic.
It became a question of how far pressure on allies might go and whether there was an obvious off-ramp.
This perception showed up when the markets opened on Tuesday, January 20th. The S&P 500 fell more than 2% in a single session, wiping out its gains for the year.
Long-dated Treasury yields jumped even as equities sold off. The dollar weakened against the euro, sterling, and the Swiss franc.
These moves rarely happen together unless investors are questioning the sovereign risk itself rather than the cycle.
The rhetoric from Europe reinforced that unease.
French and Canadian leaders openly questioned the future of the rules-based order. Those comments mattered less for their politics and more for what they signaled to capital allocators.
Alliances, once assumed to be stable, were now part of the risk calculus.
When bonds stop cushioning equities
One reason the move unsettled investors is that bonds failed to do their usual job.
In most equity selloffs, Treasuries rally as money looks for safety. This time, they also faced the sell-off.
The timing mattered as well, because the US market reopened after a holiday weekend into chaos in Japan’s bond market.
Yields on Japanese 30 year and 40 year government bonds surged to record levels after Prime Minister Sanae Takaichi called snap elections and promised looser fiscal policy.
That was the most disorderly trading session in years.
Japan is not just another bond market. It sits at the core of global funding and carry trades. When yields there jump, leverage unwinds elsewhere.
That pressure hit US duration just as geopolitical risk spiked, pushing Treasury yields higher instead of lower.
The result was uncomfortable for equity investors. Rising yields tighten financial conditions and undermine valuations at the same time.
It also sends a signal that the bond market is no longer confident, acting as a shock absorber.
That dynamic is what forced a rethink in April 2025, when tariffs first sparked a brief “Sell America” panic, and it resurfaced again this month.
Gold is telling a different story
Perhaps the clearest message is coming from gold. Prices pushed above $4,850 an ounce, setting new records. Silver and platinum followed.
This move has little to do with near term inflation data or recession fears.
Gold has been responding to two things. The first is stress in sovereign debt markets, starting with Japan but extending to the US and Europe, where debt-to-GDP ratios are set to keep rising according to IMF projections.
The second is concern about political influence over institutions.
Source: Bloomberg
Investors are watching legal battles over the independence of the Federal Reserve alongside threats to use tariffs as geopolitical weapons.
In that context, gold’s appeal is simple. It has no issuer and no policy risk.
Central banks have been reinforcing that message. The National Bank of Poland approved plans to buy another 150 tons of gold, while other emerging market central banks resumed reserve purchases late last year.
When official buyers step in at record prices, it suggests long-term diversification rather than short-term fear.
Why this is not a repeat of 2025
It is tempting to view the latest selloff as a replay of April last year, when “Sell America” dominated headlines for a few weeks before fading.
But the data then showed foreign investors returning quickly. Treasury holdings reached record highs by mid-year.
Foreign allocations to US equities climbed above 30% of portfolios, far above historical averages. Earnings held up, and US technology stocks continued to outperform global peers.
Those fundamentals have not disappeared. The US economy remains resilient, with corporate profits still strong, and of course, the dollar remains the world’s primary reserve currency.
What has changed in 2026 is the expectations about repetition.
In April, investors assumed Trump would retreat once markets pushed back.
Now, investors are less convinced there is an off-ramp on Greenland, so the issue is no longer marginal tariffs, but the use of markets as geopolitical pressure points.
In 2025, the stress expressed itself first in equities and then faded as yields stabilized and the dollar found support. This time, the sequence is reversed. The dollar weakened early and broadly.
Source: FT
When investors lose confidence in US assets, the dollar is usually the last line of defense. A simultaneous decline in equities, Treasuries, and the currency points to a repricing of confidence rather than growth.
For now, global capital still leans toward the US, but with the caveat that US valuations trade at a premium to peers.
Higher yields continue to attract buyers. There is no clear alternative market with the same depth or liquidity.
Yet the idea that political risk in the US is unpriceable has weakened.
That is the quiet lesson embedded in the recent moves. Not that America is being sold off, but that it is being questioned in ways investors had grown used to ignoring.
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