Markets breathe easier as Trump calls for negotiations on Greenland, but dismisses prospect of using force
Stocks and bonds steadied after president Donald Trump ruled out using military force to acquire Greenland, easing a geopolitical scare that has rattled global markets and threatened to push US mortgage rates higher.
The Dow Jones Industrial Average closed about 141 points higher, with the S&P 500 and Nasdaq also up, reversing part of Tuesday’s sharp sell‑off.
The 10‑year Treasury price moved higher and its yield slipped to 4.28% after Trump’s remarks in Davos, Switzerland, where he argued the US has carried much of NATO’s financial and military burden.
Market-moving remarks in Davos
Trump told the World Economic Forum audience: “We never asked for anything, and we never got anything. We probably won’t get anything unless I decide to use excessive strength and force, where we would be, frankly, unstoppable. But I won’t do that. Okay? Now everyone’s saying, Oh, good. That’s probably the biggest statement I made, because people thought I would use force. I don’t have to use force. I don’t want to use force. I won’t use force.”
While ruling out military action, Trump added that he was “seeking immediate negotiations to once again discuss the acquisition of Greenland by the United States.”
On Tuesday, stocks posted their worst daily performance since October 10 as Trump escalated tariff threats linked to Greenland and declined to rule out force, dragging the S&P 500 and Nasdaq into negative territory for 2026. The 10‑year US Treasury yield rose to 4.275% in early trading, the highest level since early September.
A jump in the 10‑year yield threatens to slam the brakes on the steep decline in mortgage rates that have briefly taken 30‑year fixed rates to multi‑year lows, leaving home loan pricing highly exposed to every lurch in the 10‑year Treasury.
Lenders use this yield as a benchmark for pricing home loans, and mortgage rates do not always fall when the Federal Reserve cut its own policy rate.
Geopolitics, the dollar and mortgage rates
The yield spike forms part of what one strategist described as a broad rotation out of US assets after Trump threatened 10% tariffs on eight European countries as part of his Greenland campaign.
“This is ‘sell America’ again within a much broader global risk off,” Krishna Guha, head of global policy and central banking strategy at Evercore ISI, wrote.
Moreover, Joyce Chang, chair of global research at JPMorgan, wrote: “America First is quietly driving diversification away from dollar assets, especially among government entities. While we have long argued that the dollar maintains its transactional FX dominance, ‘Sell America’ narratives of diversification away from dollar assets have reemerged quietly but persistently.”
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