The 'Sell America' trade has returned for 2026 and will remain a defining feature of markets through the rest of the year.
A convergence of events is forcing traders and long-term investors to reassess exposure to US assets. Precious metals are setting new records. The dollar is under pressure. Equity markets are swinging sharply from session to session.
Sell-side sentiment has shifted because legal, monetary, geopolitical, and trade developments are now intersecting in ways that materially change how risk is priced. What once sat at the edges of institutional thinking has moved to the centre of global portfolio strategy.
Markets send clear signals when confidence in governance, policy, and strategic direction starts to weaken. Those signals are visible across asset classes.
First Reason: the Federal Reserve and Institutional Pressure.
One of the most powerful triggers has been the legal escalation surrounding the Federal Reserve. Subpoenas issued to the central bank in connection with Chair Jerome Powell's congressional testimony have pushed monetary policy into the political arena.
For investors, independence of the central bank underpins everything from inflation expectations to currency stability when that independence comes under public strain, sovereign risk premia shift.
The market response has been immediate. Demand for precious metals has surged. Currency moves have accelerated. Equity volatility has increased.
A reassessment of monetary credibility alters how capital values US assets across the curve, from bonds to growth equities.
Second Reason: Venezuela, Iran, and the Return of Geopolitical Risk Pricing.
Monetary uncertainty has collided with a new phase of geopolitical assertiveness.
The US military intervention in Venezuela and the subsequent capture and indictment of Nicolás Maduro have reshaped expectations for political stability in Latin America.
At the same time, escalating tension around Iran has added a second layer of uncertainty. Sanctions pressure, domestic unrest and rising security risks around major shipping routes have placed energy markets back at the centre of geopolitical risk pricing.
Military strategy, energy security, and capital allocation remain inseparable. When sovereign power is exercised visibly, markets adjust exposure rapidly.
Global investors are responding by reducing concentration risk and widening geographic diversification.
Third Reason: Greenland and Rising Strategic Tension.
Strategic ambition in the Arctic has moved back into the foreign-policy spotlight.
Renewed focus on Greenland's importance has increased diplomatic tension with European allies and raised questions around long-term alignment on trade, defence and resources.
Geopolitics influences markets when it affects confidence in cooperation. Capital flows gravitate toward clarity and consistency.
Strategic uncertainty, even when framed as future planning, carries present-day market consequences.
Fourth Reason: Supreme Court Uncertainty Over Trade Powers.
Legal ambiguity has become another driver of portfolio adjustment.
The Supreme Court's handling of challenges to executive authority over tariffs has left companies and investors without clear direction on future trade policy.
Judicial silence in areas tied to cross-border commerce creates friction in corporate planning. When the framework governing tariffs and trade agreements appears unsettled, exposure decisions shift.
Markets value predictability in law as much as predictability in policy. When either becomes uncertain, capital seeks jurisdictions where rules feel more durable.
Fifth Reason: Earnings Misses and Valuation Pressure.
Earnings season has added a further layer to the reallocation story.
The US remains central to global corporate performance, yet recent results from key sectors, including banking, have fallen short of expectations relative to international peers.
Growth momentum is improving in parts of Europe and Asia at valuations that look more attractive to global allocators.
Market data already show US benchmarks struggling to maintain upward traction as investors position around softer earnings signals.
The relationship between earnings and capital flows has reasserted itself as a primary driver of price discovery.
Taken together, these forces no longer sit at the margins of market thinking.
Precious metals rising to records and a softer dollar reflect a broader repricing of risk. Equities increasingly trade in the context of policy stability, legal clarity, and geopolitical posture rather than growth alone.
Markets are not turning away from the US economy. A disciplined adjustment is underway.
Portfolio managers are balancing strong underlying fundamentals against a newly elevated set of risks tied to monetary independence, legal structure, and strategic ambition.
The pricing of that balance will shape global capital allocation through the rest of 2026.
In years ahead, historians of markets may look back at this period as the moment when concentration gave way to diversification, and when confidence in institutions regained its rightful place as the anchor of long-term investment strategy.