The powerful “sell America” trade that rattled markets earlier this month is now beginning to lose steam as bond yields retreat and the US dollar regains some footing. Wall Street, reacting to a combination of easing trade tensions and mixed signals from the Trump administration, has staged a three-day rally—offering investors a glimmer of hope that stability could return.

Earlier in the week, the financial world saw an unusual phenomenon: both risk assets and traditional safe havens were sold off. The 10-year Treasury yield surged past 4.4%, while the US dollar index (DX-Y.NYB) plunged to its lowest level since 2022. At the same time, gold prices soared to record highs near $3,340 an ounce, as investors sought protection in non-dollar-denominated assets.

Treasury Yields Dip, Dollar Attempts a Comeback

That dramatic flight from US assets is now reversing. On Wednesday, the 10-year yield dipped closer to 4.3%, while the dollar index edged back up, approaching the psychologically significant 100 level. Gold also pulled back briefly to around $3,290, although it rebounded again Thursday.

This tug-of-war reflects ongoing market uncertainty, despite the Trump administration stepping back from some of its more aggressive moves—including a now-paused attempt to oust Federal Reserve Chair Jerome Powell.

“Markets are watching everything — not just equities, but yields too,” said Keith Lerner, co-chief investment officer at Truist. “There may be a ‘Trump put’ on the 10-year Treasury yield.”

Trump, Bessent Walk Back Market-Jolting Rhetoric

President Trump’s recent actions, including the symbolic “Liberation Day” and a barrage of new tariffs, had shocked both Wall Street and global partners. But recent messaging suggests a shift.

Treasury Secretary Scott Bessent took a softer tone in a Wednesday speech: “America First does not mean America alone.” He reiterated the US dollar’s status as the world’s reserve currency, signaling a move to stabilize market expectations.

According to ING FX strategist Francesco Pesole, the administration initially expected tariffs to boost the dollar. Instead, investor unease led to a sharp sell-off in the greenback—a result Bessent and others are now actively working to reverse.

Relief Rally or Temporary Pause?

Despite the short-term bounce in equities, strategists urge caution. “This is a relief rally,” said Chris Versace, CIO at Tematica Research. “Markets were pricing in economic damage from China tariffs, potential retaliations, and weaker earnings guidance.”

Still, uncertainty looms large. “We don’t know what China’s response will be. And we don’t know how long this volatility will last,” Versace added.

Key Market Takeaways:

• 10-Year Yield: Retreats to 4.3% after topping 4.4%

• US Dollar Index: Stabilizing near 100 after steep selloff

• Gold Prices: Volatile, spiked again to $3,340/oz Thursday

• Stocks: Three-day rally amid easing trade tensions

• Investor Sentiment: Cautiously optimistic but watching geopolitical developments closely

With markets hanging on every word out of Washington and Beijing, the trajectory of the “sell America” trade remains uncertain. Whether this is a turning point or just a pause in the storm will depend on how global trade dynamics evolve in the weeks ahead.