'Sell America' push gathers pace as Trump ramps up talk of attempting to acquire territory
Rising Treasury yields threatened to slam the brakes on the steep decline in mortgage rates that has given United States borrowers rare relief this month, as markets reacted to renewed trade tensions between Washington and Europe over president Donald Trump’s push to acquire Greenland.
The 10‑year US Treasury yield rose to 4.275% in early trading on Tuesday, the highest level since early September. That's a jump of about 4.3 basis points from Friday after US markets were closed for the Monday holiday. That move risks undercutting a mortgage rally that has taken 30‑year rates to their lowest level in more than three years.
“If the dispute over Greenland continues to escalate, it is quite possible that EU investors will sell off U.S. government bonds,” BlueBay’s Kaspar Hense said in a note. “The dispute could put pressure on interest rates worldwide and also have an impact in the U.S,” the senior portfolio manager said.
Greenland shock feeds a broader ‘sell America’ trade
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.
That mirrrs a trend seen after Trump announced his "Liberation Day" tariffs in April last year, a wave of global levies on trading partners that resulted in a sharp jump in bond yields.
Mortgage slowdown fears despite rate reprieve
Just days earlier, Freddie Mac said the average 30‑year fixed rate tumbled to 6.06% by January 15, nearly a full percentage point below the 7.04% level a year earlier, with the 15‑year fixed slipping to 5.38%.
The 30‑year average has not been that low since September 2022, when it was still climbing on the back of aggressive Federal Reserve hikes.
Rates slid after Trump said on social media that he would order Fannie Mae and Freddie Mac to purchase an additional $200 billion in mortgage‑backed securities to push borrowing costs lower.
The drop helped mortgage applications surge, with total volumes up 28.5% week over week, according to the Mortgage Bankers Association, although brokers on the ground urged caution.
“I did see a slight uptick in purchase applications within the last week or so,” Yury Shraybman, a broker with Innovative Mortgage Brokers in Philadelphia, told Mortgage Professional America.
“Momentum is picking up. However, in my market I’d attribute the slight increase more to normal seasonality and people re‑engaging after the holidays.”
Longer‑term outlook stays challenging
Despite the recent plunge, borrowing costs remained far above pre‑pandemic norms. In October 2023, the 30‑year fixed average topped out at 7.79%, sidelining many buyers. Fannie Mae’s latest forecast suggested the 30‑year would hover around 6% in 2026 and 2027, pointing to stability rather than a return to pandemic‑era lows.
“We now expect the Fed to hold rates throughout 2026 with the next move to hike later in 2027,” J.P. Morgan chief economist Michael Feroli wrote, undercutting hopes for central‑bank‑driven housing relief.
“With home prices more than 50% above pre‑pandemic levels and mortgage rates likely to settle somewhere in the 5.75% to 6% range, cost‑of‑housing challenges will remain a headwind for the housing recovery,” TD director and senior economist Thomas Feltmate and economist Admir Kolaj wrote in October. That combination meant the latest rally in mortgage rates looked fragile and highly exposed to every lurch in the 10‑year Treasury.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
