The “sell America” trade is in full swing Tuesday morning.

President Donald Trump’s latest threats around Greenland pushed global investors to shift exposure away from U.S.-centric investments.

The U.S. dollar index headed for its biggest decline since April. U.S. bond prices tumbled, sending yields spiking.

The orange line could occur if a lot of private European and Japanese investors buy un-hedged Treasuries in a risk-off move, which would delay the need for increased U.S. debt monetization by the Federal Reserve. Either way, I expect down for the dollar in the multi-year long run, but the path to get there has these two main outcomes, in my view.

Th

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The steeper yield curve is also being reinforced by a policy change the Fed began late last year that I still don’t think is getting enough attention. While their policy is supportive of the front end via Fed Funds rate cuts and the newly announced Reserve Management Purchases (RMP), it is doubly bad for the long end. First, that front-end... See more