Published on: 2026-02-06
The Sell America trade is the market’s way of saying one thing: investors are less comfortable owning US assets at yesterday’s prices. It shows up when the usual “safe” US mix stops working together. Instead of the US dollar and US Treasuries rising to cushion equity volatility, all three can come under pressure at once.
When that happens, the debate shifts from “is growth slowing?” to “what premium should investors demand to hold US risk?”
This matters because the US still sits at the center of global portfolios. Even a slight rethink can move prices quickly. The bond market is a key part of the signal: as of February 4, 2026, the 10-year Treasury yield was 4.29 per cent, and the 2-year yield was 3.57 per cent, a steep curve that reflects long-term funding and policy risks, keeping them in the conversation.
“Sell America” trade refers to investors moving away from US-linked assets, including the US Dollar, US equities, and US duration. It is not simply “stocks down.” For years, the US earned a premium because it offered deep markets, strong institutions, and reliable liquidity.
Sell America is what you see when markets start charging more for that package. In practice, it is visible in three simple questions:
Is the dollar acting like a haven or a risk asset?
In a classic risk-off moment, the dollar often strengthens. In a Sell America regime, the dollar can weaken because investors hedge or reduce US exposure.
Are Treasuries cushioning equity stress or adding to it?
If long-term yields remain high, they may stop serving as a shock absorber for stocks.
Are US equities leading global markets, or are they losing their leadership?
If capital rotates toward non-US equities or commodities, US indices can underperform even without a recession.
Sell America is best defined by observable market behavior, not commentary. A practical definition is a sustained repricing in which (1) the US dollar weakens, (2) US long-duration rates reprice higher or fail to rally during equity weakness, and (3) US equities underperform relative alternatives, often alongside higher volatility.
A helpful confirmation checklist requires several signals at once:
| Sell America confirmation signal | What it usually implies for US stocks |
|---|---|
| Dollar weakness persists into risk-off sessions | US assets stop behaving like the default global hedge; foreign investors demand more compensation for unhedged USD exposure. |
| Long-end yields stay elevated or rise on weak growth news | Higher term premium compresses multiples; equity rallies become more fragile. |
| Yield curve steepening driven by supply and policy risk | Banks may benefit at the margin, but broad equities face higher discount rates and tighter financial conditions. |
| Volatility stays bid even on rebounds | Dealers and systematic flows reduce risk quickly; liquidity gaps become more frequent. |
| Credit stops confirming the equity rebound | Risk appetite is deteriorating beneath the index surface. |
When policy direction becomes harder to handicap, investors protect themselves by demanding a higher return for the same level of risk. That can show up as a weaker dollar and more fragile equity sentiment.
Trade policy is a direct example of why markets can reprice quickly. The San Francisco Fed’s event study of the April 2, 2025, tariff announcement found broad market repricing across stocks, credit risk, and exchange rates, consistent with investors treating tariffs as an economy-wide shock rather than a narrow sector story.
Markets can tolerate political noise until it touches the perceived reaction function of monetary policy. Episodes that elevate uncertainty around Federal Reserve independence have coincided with dollar weakness and simultaneous stress across equities and yields, a pattern that breaks the classic “risk-off” playbook.
Large deficits are not new. What changes is when the bond market starts to price them more aggressively.
CBO’s baseline projects a $1.9 trillion deficit in fiscal 2025 and federal debt held by the public rising to 118 per cent of GDP in 2035. That implies heavy issuance over time, which can keep long-term yields sensitive to auction demand and investor risk appetite.
A common misunderstanding is that Sell America must show up as obvious, sustained foreign selling in every dataset. In reality, markets often reprice at the margin.
Treasury’s TIC release showed a $212.0 billion net inflow in November 2025 and noted that the next release will be on February 18, 2026. That is not the picture of a clean, one-way exit. It is consistent with a world in which investors still buy US assets but demand higher returns and hedge more aggressively.
At the same time, early-2026 reporting describes a meaningful rotation into emerging markets as the US dollar slid toward a four-year low, supporting the idea that diversification flows can matter even without panic selling.
A helpful way to frame it is as winners and losers, based on what investors are buying instead.
| Where money tends to rotate | Why it attracts flows | What to watch |
|---|---|---|
| Europe (especially value-heavy sectors) | Often cheaper equity multiples than the US, higher dividend culture, and heavier weight in banks and industrials that can benefit when rates are not falling fast | Political risk, energy prices, and whether earnings revisions actually turn up |
| Japan | Corporate governance reforms and buybacks have improved shareholder returns; global investors also like Japan as a developed-market diversifier when US leadership narrows | The yen: a stronger yen can boost local purchasing power but can cap exporters’ upside |
| Emerging markets (selectively) | A softer US dollar can ease pressure on EM funding and support risk appetite; commodity-linked EM can benefit if global demand holds | Country dispersion is wide: politics, inflation credibility, and external balances matter more than the “EM” label |
| Gold | A hedge when investors want protection without relying on US bonds to do the job; benefits when confidence in policy stability wobbles | Real yields and positioning: gold can stall if yields rise sharply or positioning gets crowded |
| Energy and commodities | A practical inflation hedge and a beneficiary when supply tightens or geopolitics raises risk pricing | Oil’s sensitivity to growth: commodities can drop fast if demand expectations weaken |
| Global value stocks | Cash flows today matter more when rates are high; dividends and buybacks become more valuable | Value is not a safe haven: it can still draw down if growth rolls over hard |
When the long end reprices due to term premium, equities experience valuation pressure even if earnings estimates have not collapsed. Long-duration sectors and concentrated leadership are most exposed because a larger share of their value is anchored in distant cash flows.
In this regime, the market pays less for “certainty,” and it pays even less for “certainty that depends on low volatility.”
A weaker dollar can lift reported earnings for US multinationals through translation effects, but the benefit is conditional. If dollar weakness is tied to credibility and inflation risk, it can keep policy tighter for longer and raise input costs via imports.
Tariff episodes create a second margin squeeze by raising costs and forcing supply-chain adjustments, often before pricing power can fully offset the impact.
Sell America is a regime in which hedges can fail. If Treasuries do not reliably rally on equity weakness, portfolios are forced to hedge through options, volatility products, or outright de-risking. That pushes implied volatility higher and can create liquidity gaps in index markets when systematic strategies cut exposure.
A US-heavy global portfolio structure means that even a pause in incremental inflows can move prices. TIC data reinforce that net flows are volatile and can swing sharply from month to month, consistent with a market that reprices at the margin rather than through a clean, continuous exit.
1) Wait for confirmation, not a headline. Treat Sell America as “on” only if you see a combo: weaker dollar + long-term yields not falling + equities struggling to hold rebounds.
2) Cut size and keep timeframes shorter. This regime can whip fast on policy and rate moves, so smaller positions help you survive noise and avoid forced exits.
3) Define invalidation before entry. Write down what proves you’re wrong, such as the dollar stabilizing and long-duration Treasuries consistently cushioning equity pullbacks again.
4) Don’t rely on Treasuries as an automatic hedge. If bonds stop offsetting stock declines, rotate toward hedges that match the risk (options/vol exposure) and keep them sized conservatively.
No. A bear market is a direction in equities. Sell America is a correlation regime in which the US dollar and Treasuries can fail to hedge US equity drawdowns. That distinction matters because it changes which hedges work and how fast risk can compound.
Not necessarily. Flows can remain positive even while the regime is active. November 2025 TIC data showed a $212.0 billion net inflow, consistent with a market that reprices through hedging costs and the term premium rather than a continuous liquidation narrative.
Long-duration and highly valued growth segments are most exposed to term-premium shocks. Smaller companies can also be vulnerable because refinancing sensitivity rises when long yields stay high and credit conditions tighten, even if headline indices appear resilient.
It is usually cyclical, not existential. The dollar can weaken meaningfully without losing its status as a reserve currency. The more immediate market issue is the hedging cost and the risk premium demanded for holding US exposure, especially when the term premium and policy uncertainty rise together.
Sell America is best understood as a repricing of US risk premia across assets, not as a slogan about equities. The regime emerges when the dollar weakens, long-end yields stay sticky, and equities lose leadership, often alongside persistently higher volatility.
The drivers are tangible: policy uncertainty that feeds inflation risk, a fiscal path that sustains heavy Treasury supply, and a market structure that can amplify stress when correlations break.
For traders, the edge is not prediction. It is preparation: define regime confirmation, reduce hidden correlation, assume hedges must prove themselves, and treat invalidation levels as core risk controls rather than afterthoughts.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
1) FRED
2) US Department of The Treasury
3) Congressional Budget Office
