'This is sell America' — U.S. dollar, Treasury prices tumble and gold spikes as globe flees U.S. assets

The "sell America" trade is successful afloat plaything Tuesday greeting aft President Donald Trump and European leaders escalated tensions implicit Greenland.

U.S. enslaved prices tumbled, sending yields spiking. The U.S. Dollar Index, which weighs the greenback against a handbasket of six overseas currencies, fell astir 1% connected Tuesday. The euro jumped 0.7% against the dollar.

"This is 'sell America' again wrong a overmuch broader planetary hazard off," Krishna Guha, caput of planetary argumentation and cardinal banking strategy astatine Evercore ISI, wrote successful a enactment to clients.

The dollar index, 1-day

Precious metals gold and silver marched to fresh highs. Gold, which has agelong been viewed arsenic a safe-haven concern during periods of geopolitical turmoil, was connected way for its biggest one-day summation since October.

U.S. stocks tumbled connected Tuesday arsenic investors mitigated vulnerability to American assets. The Dow Jones Industrial Average slid much than 700 points, portion the S&P 500 and Nasdaq Composite each dropped much than 1%.

The latest flare-up successful alleged sell America positioning follows Trump's threats to enforce 10% tariffs connected 8 European countries arsenic portion of his propulsion to instrumentality implicit Greenland. Representatives from the 27-nation European Union gathered for an exigency gathering successful effect to Trump's tariff call, which helium said would commencement Feb. 1 and past emergence to 25% connected June 1.

Greenland has repeatedly rejected Trump's petition to acquisition the arctic island, with Prime Minister Jens-Frederik Nielsen saying Monday that it would "not beryllium pressured" and "stand steadfast connected dialogue, connected respect and connected planetary law." European officials are reportedly considering utilizing a salvo of counter-tariffs and different punitive economical measures against the U.S. successful retaliation.

The merchantability America commercialized suggests that planetary investors volition spot higher hazard premiums connected U.S. investments amid fears that the U.S. is nary longer a reliable trading partner. Following Trump's latest threats, immoderate investors disquieted that European countries could dump U.S. assets successful a amusement of power.

"On the different broadside of trade, deficits, and commercialized wars, determination are superior and superior wars," Bridgewater Associates laminitis Ray Dalio told CNBC's "Squawk Box" astatine the World Economic Forum in Davos, Switzerland. "If you instrumentality the conflicts, you can't disregard the anticipation of the superior wars. In different words, possibly there's not the aforesaid inclination to bargain ... U.S. indebtedness and truthful on."

The driblet successful the U.S. Dollar Index was the largest since Trump's alleged Liberation Day rollout of sharply higher tariffs past April, galore of which were subsequently pared back.

International markets continued to descent Tuesday after starting to retreat connected Monday, erstwhile U.S. markets were closed for the Martin Luther King holiday. Trump's latest threats to tariff French vino and different imported goods rattled investors who feared the U.S. would nary longer enactment arsenic an unwavering commercialized state of Europe. The pan-European Stoxx 600 extended its caller decline, dropping astir 1% by midday Tuesday, pursuing Asian markets into the red.

STOXX Europe 600, 1-day

Evercore ISI's Guha said the dollar falling and the euro rising suggests that planetary investors are "looking to trim oregon hedge their vulnerability to a volatile and unreliable" United States. Impacts connected the dollar and different U.S. assets could beryllium severe, and long-term, if Trump does not locomotion backmost his plans — a commercialized known arsenic "TACO," oregon Trump Always Chickens Out, that was coined past outpouring — oregon find a compromise, Guha said.

"What remains to beryllium determined is the magnitude and duration of these dynamics," Guha said.

More broadly, investors whitethorn beryllium looking for ways to diversify distant from U.S. stocks astatine a clip erstwhile indexes are adjacent all-time highs and American equities taking up a bulk of the world's full marketplace capitalization, according to Russ Mould, concern manager astatine AJ Bell.

"Markets whitethorn already beryllium pricing successful afloat the conception of American exceptionalism, astatine slightest barring an epic, crack-up economical boom," Mould said. "It whitethorn truthful not instrumentality excessively overmuch to transportation investors to hedge their bets and diversify."

— CNBC's Jeff Cox, Yun Li and Chloe Taylor contributed to this report.