The sell-off in financial markets in April was broader and more volatile than a typical correction, heightening concerns that Washington’s aggressive and ever-changing trade policies could cause long-term damage to the United States’ financial standing.

The S&P 500 has fallen 5.4% since President Donald Trump announced the tariffs on April 2, with daily swings drawing unsettling comparisons to notorious periods of financial turmoil such as 2008 and 1987. The declines over the past several sessions follow a shaky start to 2025 for U.S. stocks, and now other major U.S. asset classes such as the dollar and Treasuries are also starting to slide.

“The biggest revelation from this year, from Trump’s presidency, from everything that’s happened is that capital is leaving the United States,” BCA Research strategist Marco Papich said on the Financial Forum on the 11th. “Obviously, this has become a vicious cycle - high bond yields, a falling dollar, and this has become the focus. However, capital flight began long before ‘Liberation Day’... The United States is the bubble. The whole United States is.”

The wild swings in stocks are eye-popping in their own right, but Wall Street professionals are increasingly concerned about moves in currency and bond markets. U.S. Treasuries and the dollar typically benefit from a safe-haven environment; it’s a sign of America’s historical financial strength.

However, the decline in bond prices on the 11th pushed the benchmark 10-year Treasury yield to over 4.5% at one point, higher than 3.99% a week ago. At the same time, the Intercontinental Exchange U.S. Dollar Index fell to its lowest level in three years. The U.S. dollar fell sharply against safe-haven currencies such as the yen and Swiss franc, as well as the euro.

"The market is reassessing the structural appeal of the U.S. dollar as a global reserve currency and is undergoing a rapid process of de-dollarization," Deutsche Bank strategist George Saravelos said in a note to clients on the 11th.

To some extent, some of the rapid moves in financial markets may be mechanical, feeding off one another. For example, a fall in U.S. stocks and bonds could put downward pressure on the dollar because foreign investors now have less demand for the currency.

But the size and scope of these moves suggest that deeper factors may be changing, with investors now actively moving away from the U.S.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said on the "Financial Forum" column on the 11th: "Normally, when tariffs are raised significantly, I would predict that the dollar will appreciate. The fact that the dollar has fallen while tariffs have been raised, I think this fact adds credibility to the claim that investor preferences have changed."

Given that foreign governments and other institutions are often major holders of U.S. Treasuries, that’s likely the bond market’s thought process as well. Gennady Goldberg, head of U.S. rates strategy at TD Securities, told CNBC that he hasn’t seen direct evidence of foreign investors selling Treasuries, but that concern alone could be enough to shake the market.

“The market is very confidence-driven,” Goldberg said. “Even the perception that foreign investors are trying to stay out of the Treasury market could cause quite a bit of panic.”

Rising U.S. Treasury yields could also cast a shadow on the U.S. government's spending outlook, and thus on the outlook for economic growth. Rising yields mean the U.S. government needs to pay more interest on rolling over or issuing new debt, thus exacerbating market concerns about the federal deficit. (Compiled by Zheng Guoyi)