Treasury and dollar slides reignite 'Sell America' fears. But there's still a buying opportunity in one corner of US debt.

Huileng Tan

Tue, Jun 3, 2025, 8:54 AM 3 min read

• Treasurys are widely considered risk-free assets, but recent market patterns show investors are getting jittery.

• Long-dated Treasury yields breached 5% recently, indicating weaker demand and investor hesitation.

• Analysts suggest gold and short-term Treasurys as safer options amid economic uncertainty.

Treasurys have been under scrutiny amid President Donald Trump's trade policies, with long-dated debt facing pressure. But analysts say there is still opportunity in the bond market.

Short-dated Treasurys are still seen as safe amid the dollar's dominance and likely Federal Reserve interest rate cuts should the economy enter a downturn.

"We have seen a bit more outflow from US dollar bonds, but I don't see anything that will be replacing the US dollar in the future," Warut Promboon, the managing partner at Hong Kong-based research firm Bondcritic, told Business Insider.

His comments come as 30-year yields recently climbed above 5% — a sign of weaker demand as investors grow wary of locking in lending to the US government for decades.

Warut, who has over 20 years of experience in the bond market, is advising clients to lean into gold and shorter-dated dollar bonds, such as five-year Treasurys.

While Warut isn't bearish on 10-year Treasurys, he prefers the five-year term debt due to its shorter maturity and lower exposure to long-term volatility.

His comments come amid an unusual divergence in Treasury yields, which have risen, and the dollar, which has declined — a trend that some have termed the "Sell America trade."

His take echoes a recent call from Goldman Sachs, which last week recommended adding gold and short-term Treasurys to portfolios.

Gold prices reached a record high of over $3,500 per ounce in April as investors fled to the time-tested store of value due to unprecedented uncertainty.

Due to Trump's import tariffs and policy uncertainty, analysts are uncertain about the longer-term outlook for growth and bond yields.

"The broader structural story is that US economic exceptionalism is fading as the burden of twin deficits grows heavier," wrote analysts at Deutsche Bank on Monday, referring to the US's fiscal and current account deficit.

The analysts said they are bearish on the dollar and see upward pressure on bond yields.

"The dollar's dominance is waning; valuation and capital flow dynamics are taking over," the Deutsche Bank analysts added.

However, it may be premature to assume that the divergence in the dollar and Treasury yields is a permanent feature, wrote Vishnu Varathan, Mizuho's head of macro research for Asia, excluding Japan.