Dollar, treasury prices fall; Gold soars amid Trump’s Greenland push

““Selling America” ​​trade After the President, Tuesday morning is in full swing Donald Trump and European leaders escalated tensions Greenland.

U.S. bond prices fell, sending yields down sting. The US dollar indexThe greenback’s weight against a basket of six foreign currencies fell nearly 1% on Tuesday. The euro rose by 0.7% against the dollar.

Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a note to clients: “This is again ‘Selling America’ in the context of broader global risk.

Precious metals gold and silver went to new heights. Gold, long seen as a safe-haven investment during periods of geopolitical turmoil, was on track for its biggest one-day gain since October.

US stocks It fell on Tuesday as investors reduced exposure to US assets. The Dow Jones Industrial Average slipped by more than 700 points, and S&P 500 and Nasdaq Composite each down more than 1%.

the so-called last flare Sells America placement suits Trump They threatened to introduce 10 percent tariffs to eight European countries as part of their quest to conquer Greenland. Representatives of 27 EU countries gathered for an emergency meeting in response to Trump’s call for tariffs, which will begin on February 1 and increase to 25% on June 1.

Greenland has repeatedly rejected Trump’s request to buy the Arctic island with Prime Minister Jens-Frederik Nielsen. They say it’s Monday it “will not be pressured” and will “commit to dialogue, respect and international law”. European officials it was announced that it will be considered retaliatory tariffs and other punitive economic measures against the US.

America’s trade suggests that global investors will place higher risk premiums on US investments amid fears that the US will no longer be a reliable trading partner. After Trump’s latest threats, some investors worried that European countries might abandon US assets in a show of force.

“On the other side of trade, deficits, and trade wars, there are capital and capital wars,” Bridgewater Associates founder Ray Dalio said. About it on CNBC’s “Squawk Box” In World Economic Forum DavosSwitzerland. “If you take conflicts, the possibility of capital wars cannot be ignored. In other words, maybe less inclined to buy … US debt, etc.”

The fall in the U.S. dollar index was the biggest since Trump imposed sharply higher tariffs on the so-called Freedom Day last April, most of which have since been reversed.

International markets continued to slide on Tuesday after starting to retreat on Monday when US markets were closed for the Martin Luther King holiday. Trump’s latest threats of tariffs on French wine and other imports have unnerved investors who fear the US will no longer act as Europe’s unwavering trade ally. Pan-European Stoxx 600 extended its recent decline, will be down about 1% by noon next Tuesday Asian markets to red.

Evercore ISI’s Guha said the dollar’s decline and euro’s rise show global investors are trying to reduce or hedge their exposure to a “volatile and uncertain” United States. If Trump does not abandon his plans, the impact on the dollar and other US assets could be severe and long-lasting. “TACO”, or Trump, made last spring, always bring out the chickens, or compromise, Guha said.

“The extent and duration of this dynamic remains to be determined,” Guha said.

Russ Mould, chief investment officer at AJ Bell, said investors may be looking for ways to diversify away from U.S. stocks at a time when indexes are near all-time highs and U.S. stocks account for most of the world’s total market capitalization.

“Markets are fully pricing in the concept of American exceptionalism, at the very least an epic, economic boom,” Mold said. “So it may not take too much to persuade investors to hedge their bets and diversify.”

— CNBC’s Jeff Cox, Yoon Lee and Chloe Taylor contributed to this report.