Calls to “Sell America” Grow Louder — Money Flows Into Safe-Haven Hubs!

(Washington/Ottawa, Feb 15) Signs of a renewed “Sell America” trade have resurfaced in global markets, driven by investors reassessing U.S. policy uncertainty and perceived risks to the independence of the Federal Reserve. As required risk premia on U.S. assets rise, capital is increasingly rotating toward markets with lower political volatility and more predictable risk profiles. Canada has emerged as a key destination, supported by currency valuation advantages and the structure of its asset markets.

Relative performance has become the clearest signal. Canada’s S&P/TSX Composite Index surged about 28% last year, significantly outperforming the S&P 500’s roughly 16% gain, marking its strongest relative performance against U.S. equities in around two decades. The trend has carried into early 2026, with the Canadian benchmark up about 3.7%, still ahead of U.S. stocks at roughly 1.7%.

Institutional credibility enters pricing

Market participants note that once investors begin factoring institutional credibility and policy stability into valuation frameworks, asset allocation decisions shift away from pure growth narratives toward markets offering more stable risk-return characteristics.

Several institutions point to the same transmission mechanism: escalating pressure on the Federal Reserve and its chair could raise the risk premium on U.S. assets, amplifying volatility through movements in Treasury yields, relative weakness in U.S. equities, and a softer U.S. dollar.

Strategists argue that a mild version of last year’s “Sell America” episode could re-emerge, while asset managers warn that global investors are increasingly demanding higher compensation for holding U.S. assets. Near-term market swings are likely to depend on whether institutional signals can temper policy noise.

Canada’s appeal also reflects currency considerations. The Canadian dollar is widely viewed as structurally undervalued against the U.S. dollar, strengthening incentives to hedge U.S. dollar exposure and rotate into Canadian-dollar-denominated assets.