Wall Street’s pivot on the U.S. market: warns of a ‘sell America’ trade

U.S. President Donald Trump’s heightened pressure campaign on Federal Reserve Chairman Jerome Powell on Monday caused a significant drop in financial markets to kick off the week. The sell-off also sparked a broader debate about the role of ‘safe-haven’ assets in the wake of global and economic uncertainty.

Trump called Powell a “major loser” and warned that the U.S. economy could slow down unless interest rates are lowered immediately. He wrote on Truth Social that “‘Preemptive Cuts’ in Interest Rates are being called for by many.”

Financial market drops amid Trump’s attack on Powell

US stocks and dollar sink as Trump renews attacks on Fed chair Powell
Currency sell-off intensifies after president steps up criticism of central bank head for not cutting rates

— Ajay Bagga (@Ajay_Bagga) April 22, 2025

The President argued that there is currently “virtually No Inflation” in the U.S. and that costs for energy and “most other things” are on the decline. Trump also added that, with costs trending downward just like he predicted they would do, there can almost be no inflation, “but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW.”

Trump’s latest remarks raised questions in his administration about whether they can legally fire the Fed Chair before his term expires in May 2026.

Risk-off investments, including long-term bonds and the U.S. dollar, which are considered historical hedges against volatility, aggressively sold off yesterday, parallel to the sharp drop in the stock market. The dollar (DX-Y.NYB) plummeted to its lowest since 2022, while the 10-year yield (^TNX) rose back above 4.4%.

The 10-year yield continued to trade around 4.4% on Tuesday while the U.S. dollar index dropped below the 100 level, which is a key psychological and technical level. The markets showed unusual developments because they appeared to pull back instead of investors moving to safe havens like bonds or U.S. currencies. 

Wall Street warns of a ‘sell America’ trade

A rare “SELL AMERICA” moment is unfolding.

For the first time since 1981, the US dollar index is down over 5%, the S&P 500 is off more than 5%, and 10-year Treasury yields have climbed 10bps—all in just a month. That combo hasn’t hit since the double-dip recession days. pic.twitter.com/tkB07G4o8T

— Wall St Engine (@wallstengine) April 21, 2025

The unusual market development depicts a rare dislocation Wall Street strategists have dubbed the “sell America” trade. The chaotic market dynamics have raised concerns over stagflation, where growth stalls, inflation persists, and unemployment rises, keeping Wall Street on edge that shifting trade dynamics could induce a self-inflicted recession.

Wall Street saw investors move into commodities like gold, which rallied to yet another record on Tuesday, reaching $3,500 per ounce of gold. Investors also rushed to speculative positions such as Bitcoin, which traded near $91,000 for the first time since February.

Fears of political interference in monetary policy might have triggered Monday’s sharp decline, but the exact catalyst remains unclear amid pressure from tariffs, slowing growth, and escalating geopolitical tensions.

“This is not a good spot to be in in terms of narrative. No one’s betting against America, but no one’s saying, ‘Oh, we should be going all in over there right now, either.”

-Ann Berry, founder of Threadneedle Ventures.

JPMorgan also noted that U.S. equity ETFs realized net outflows of $3.6 billion last week, while developed international markets saw above-average inflows totaling $3 billion. The financial institution acknowledged that it was a notable shift given how heavily U.S. markets rely on foreign capital.

Chief market strategist at Ritholtz Wealth Management, Callie Cox, maintained that foreign investors own nearly a third of U.S. equities and more than a quarter of U.S. government debt. Cox noted that “Wall Street is America’s secret weapon of global dominance.”

She also argued that it’s because the U.S. has innovative companies, strong institutions, and a stable rule of law. “Every one of those factors has been called into question lately,” Cox added.

Micheal Goosay, chief investment officer of global fixed income at Principal Asset Management, believes that international investors who are supporters of the U.S. Treasury market “are getting a little nervous.” He argued that, whether it’s related to government uncertainty and policy uncertainty or growth and inflation uncertainty, it was undermining some of the confidence they have.

In the wake of economic uncertainty, some argue about the long-term prospects of safe havens. Kevin Khang, senior economist at Vanguard, puts it “At the minimum, this reminds all of us that the world is watching whether the U.S. is going to continue its role as a provider [of] stability.”

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