Stocks, dollar decline, yields hit four-month highs

Nasdaq and S&P 500 futures slipped more than 1%, while the dollar was broadly ‌weaker and the yield on the 10-year Treasury note increased to 4.265%, its highest level since early ​September

Stocks slipped on Tuesday, the dollar declined for a second straight day and U.S. ​Treasury yields jumped to four-month highs after U.S. President Donald Trump intensified his push to take control of Greenland.

Trump’s threat of ‌additional tariffs on European nations if a deal on Greenland is not reached has revived talk of the ‘Sell America’ trade that emerged in the aftermath of his sweeping “Liberation Day” levies last April, where investors sell U.S. stocks, dollar and Treasuries.

That trade appeared to be gathering momentum in Asian hours on Tuesday. Investors were also scurrying for safe-haven assets including the Swiss franc and gold.

U.S.’ Nasdaq and S&P 500 futures slipped more than 1%, while the dollar was broadly ‌weaker and the yield on the 10-year Treasury note increased to 4.265%, its highest level since early ​September.

European futures were 0.27% lower, pointing to another subdued open after the pan-European STOXX 600 dropped 1.2% on Monday.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.24%, inching further away from the record highs it hit last week.

Kyle Rodda, senior market analyst at Capital.com, said there’s ‍hope that the escalating tensions will be self-limiting “if the markets send a signal that his actions are bad for investors and the economy.”

But there’s the risk that’s not the case and we are heading for a potentially disruptive standoff between the U.S. and EU, he added.

All eyes will now be on Davos where Trump said the ⁠US would talk about acquiring Greenland.

Trump’s threats have triggered a sharp pushback in Europe and raised questions on the outlook of trade deals struck ‍since then with Europe.

Even if there is de-escalation this episode will still cause many to doubt the credibility of any deal with Trump and so tariff ‌uncertainty will ‌remain elevated, MUFG’s Europe economist Henry Cook said.