The "sell America" trade could continue on Wednesday after President Donald Trump 's address to business and political leaders, according to Ian Lyngen, head of U.S. rate strategy at BMO. Trump spoke on topics ranging from inflation to domestic investment to the state of Europe at the World Economic Forum in Davos , Switzerland, Wednesday morning. Later on Wednesday, he will join CNBC for an exclusive interview, which will air at 1 p.m. ET. Trump said during his speech that he has respect for Denmark and its autonomous territory Greenland. But he said the U.S. is in the best position to secure the mineral-rich nation and called for "immediate negotiations" to annex the island. He has argued that taking control of Greenland is a national security priority despite European opposition. "We want a piece of ice for world protection," Trump said. "They won't give it." Traders are scrutinizing Trump's comments about acquiring Greenland , including a threat of tariffs on several European nations that he has made. "The market will be more wary of any comments on Greenland, tariffs, and NATO," Lyngen wrote in a note to clients. "Trump's agenda has unquestionably brought into question the traditional role of the [U.S.] on the global stage." Investors responded to Trump's Greenland plans on Tuesday by putting downward pressure on U.S. stocks and bonds, while sending commodities like gold higher, Lyngen noted. This type of trade has become known as "sell America," with investors placing higher risk premiums on American assets as a result of rising political turmoil. The three major U.S. stock indexes notched their worst sessions since October on Tuesday. But stock futures jumped on Wednesday after Trump said during his speech that he wouldn't use force to take over Greenland. Market participants would have been in for more downside on Treasurys if Trump was not explicit on his plans for Greenland, Lyngen warned. Many U.S. Treasury yields inched lower as Trump spoke on Wednesday. "It's tempting to say markets are collectively probing for dip-buyers in [U.S.] assets and profit-takers in commodities, although there seems to be no concerted effort to reverse the recent trends," Lygen said.
