U.S. Stocks, Bonds, and Currency All Suffer! Is the True Face of ‘Trump Trade’ Actually ‘Sell America’?

TradingKey - The shocks to the capital markets brought by U.S. President Donald Trump have come in waves. With tariff risks still looming, the ongoing drama of attacking Federal Reserve Chair Jerome Powell has escalated. The market may be reaching a new consensus: the so-called "Trump trade" is essentially a "sell-off of America," as U.S. stocks, bonds, and the dollar experience another historic "triple rout."

On April 21, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all fell more than 2%. Tesla plummeted 6%, while Nvidia dropped 4.5%. The "bond storm" that swept Wall Street two weeks ago regained momentum, with the 10-year Treasury yield rising over 7 basis points and the 30-year Treasury rate climbing more than 8 basis points. The U.S. Dollar Index briefly broke below the 98 level, hitting its lowest point since March 2022.

CICC noted that the simultaneous decline of U.S. stocks, bonds, and the dollar is relatively rare historically. Since January 1971, there have only been six months where U.S. stocks, bonds, and the dollar all fell simultaneously. If this trend continues for the rest of April, it will mark the seventh such occurrence since 1971.

Analysts believe that Trump's tariff war has dealt a blow to U.S. corporate earnings and the outlook for economic growth. The latest wave of selling in dollar assets has intensified due to Trump's threat to fire Fed Chair Powell.

Following two consecutive days of public criticism of Powell last week, Trump again posted on social media, stating that energy costs and food prices have significantly declined, meaning there is virtually no inflation. However, he warned that the economy could slow down unless Powell, whom he referred to as "Mr. Too Late" and a "major loser", cuts interest rates immediately.

Trump’s dissatisfaction with the Fed’s reluctance to cut rates has led him to threaten to prematurely terminate Powell’s tenure as Fed Chair. This move has drawn strong criticism from various sectors of society, as it would undermine the Fed’s independence and trigger a confidence crisis in the dollar.

The Real "Trump Trade": Sell America?

Bloomberg reported that not long ago, investors were anticipating the so-called "Trump Trade" — essentially reinforcing the notion of American exceptionalism. However, it now appears more like a "sell-off of U.S. equities."

Barclays stated that while the dismissal of the Fed Chair remains a low-probability event, the real prospect of reduced Fed independence could introduce significant risks to the dollar that cannot be ignored.

JPMorgan noted that the U.S.'s sudden shift toward highly protectionist policies has damaged its reputation, leading to a loss of confidence in U.S. policies and reducing the price investors are willing to pay for U.S. assets.