A return to ‘sell America?’
The combination of (geo)political risks mounting up in the US have invited episodes of ‘sell America’ in recent sessions. This is a theme that dominated early in 2025 during Trump’s upheaval of the global terms of trade via a manipulation of tariffs. ‘Sell America’ is the trading outcome characterised by a widespread decline in value amongst US assets. Unlike during normal circumstances when, for example, a decline in the value of US bonds may attract investors towards a higher yielding Dollar or, perhaps, where a declining Dollar boosts the price of equities, ‘sell America’ sees all assets fall simultaneously.
Unsurprisingly for a defensive phenomenon, that adjustment in price tends to be relatively violent. A simultaneous fall in the Dollar, Treasuries, as well as corporate debt and equity reflects a desire from investors to brace against a US risk. Almost every time that this has happened in a disorderly fashion, it has been accompanied by a surprise from the White House. We saw a return to this theme most recently after the combination of US military intervention in Venezuela and the DoJ’s subpoena to the Federal Reserve Chair, Jay Powell. As we wrote recently, the prospect of intervention in Iran from the US is a further risk that investors are considering.
Despite this theme rearing its head, a more widespread ‘sell America’ theme is not underway. January and February typically exhibit high seasonality in favour of the Dollar and that default to Dollar demand is showing through the risk. The inflation and jobs reports observed in January already do not paint the same picture of great US exceptionalism as seen in recent years. However, they remain robust enough that an immediate dovish repricing from the Fed is unlikely to undermine the Dollar at this time. With the January decision coming into focus, markets might even expect a hawkish push back against political influence.
Discussion and Analysis by Charles Porter
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