All three major asset classes—stocks, bonds, and the currency—are falling indiscriminately, as investors are losing trust and patience in the United States.
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All three major asset classes—stocks, bonds, and the currency—are falling indiscriminately, as investors are losing trust and patience in the United States.
Capital is fleeing, and the U.S. is being sold off.
Navigating Web3 tides with focused insightsBy Ji Zhenyu, Tencent News "Yixian"
Trump's tariff policy continues to threaten U.S. stock markets, steadily eroding investor confidence as fleeting hopes are repeatedly extinguished. In April, U.S. financial markets experienced an exceptionally rare phenomenon—equities, bonds, and the dollar were all simultaneously sold off.
"This is no longer normal capital rotation—it’s a broad withdrawal," a U.S. hedge fund manager told Tencent News "Yixian."
On April 21, the same scenario unfolded again in U.S. financial markets. The three major U.S. equity indices plunged at the opening and remained deeply negative throughout the day. Meanwhile, U.S. Treasury yields continued to rise, the dollar weakened further, and gold hit another record high.
"Judging from market behavior, investors are losing trust in—and patience with—the United States," said the hedge fund manager.
On April 2, President Donald Trump announced a sweeping reciprocal tariff policy whose scale and scope surpassed even the most pessimistic expectations and scenario analyses of market participants and research institutions. Since then, U.S. assets have faced successive waves of selling pressure—not just U.S. stocks, but also the dollar and Treasuries, all falling indiscriminately.
The hedge fund manager noted that he has clearly observed shifts in sentiment among his European clients. Several months ago, some large European funds had begun preliminary internal discussions about diversifying away from dollar-denominated assets, driven initially by rising European equities and what economists call "animal spirits." However, these early discussions were quickly suppressed internally by more rational voices.
Over the past at least 15 years, investing in dollar-related assets has delivered substantial returns. Abruptly shifting course would not be a mature or rational decision, especially for massive funds.
But since April began, those earlier "preliminary discussions" have encountered little resistance within many funds. Large institutional investors are now seriously considering the possibility of withdrawing capital from the United States.
"This situation is extremely rare," said the hedge fund manager. "The only comparable moments I can recall are before systemic crises like those in 2001, 1998, and 2008, each triggered by a标志性 event such as the dot-com bubble or the housing bubble."
In his view, simultaneous declines across equities, bonds, and currency typically occur during crises in emerging market countries. It is surprising, therefore, to see such a pattern emerge recently in the United States—the world’s most mature and advanced financial market.
Traditionally, the U.S. dollar and U.S. Treasuries are considered global safe-haven assets. During times of crisis, capital rushes into them for protection, driving their prices up. But this year, amid a financial crisis originating in the U.S. and largely shaped by Trump’s policies, investors have been forced to seek alternative havens—such as cash or even the euro. So far this year, the euro has risen nearly 20% against the dollar, while Switzerland’s 2-year government bond yield briefly turned negative, indicating investors are willing to pay the Swiss government to safeguard their funds.
Many recent developments in U.S. financial markets have overturned long-held assumptions among professional investors.
"I can accept a fall in the dollar or U.S. stocks, but it's hard for me to accept that all asset classes are falling indiscriminately—making the U.S. look like an emerging market. This goes far beyond anything I’ve understood through decades of investing," said the hedge fund manager.
He added that short-term panic-driven sell-offs aren’t his biggest concern, as they’re often fueled by temporary irrational sentiment and tend to reverse as markets eventually return to rationality and common sense. Often, such panic actually creates new investment opportunities. But what he’s seeing recently—a coordinated drop in stocks, bonds, and the currency—is different: capital is exiting in an orderly fashion, not out of panic, but with calm, determination, and no hesitation.
The market on April 21 reflected precisely this: the one-day VIX index, which measures market fear, actually dropped 2.23%.
"Foreign capital is fleeing, and domestic U.S. investors are deleveraging—that’s the reality I see right now," said the hedge fund manager.
If conditions worsen, the Federal Reserve will likely be forced to act, as it did during the 2008 financial crisis and the 2020 pandemic. For now, however, the Fed remains on hold.
The Fed’s current lack of coordination has drawn repeated attacks from Trump. On April 21, Trump directly criticized Fed Chair Jerome Powell for moving too slowly and even threatened to fire him outright. Powell, in turn, has taken a firm public stance, stating he intends to serve until the end of his term in 2026.
The open conflict between the U.S. president and the Fed chair has further damaged market and investor confidence. Krishna Guha, Vice Chairman of investment bank Evercore ISI, said in a Monday interview with CNBC that if Trump attempts to remove Fed Chair Powell, it could trigger a sharp sell-off in U.S. equities.
"If the independence of the Federal Reserve comes into question, it will raise the bar for rate cuts," Guha said. "And if there’s an actual attempt to remove the Fed chair, I believe markets would react violently—yields would rise, the dollar would depreciate, and equities would plunge."
"I can't believe this is really what the administration wants," Guha added.
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