The market is no longer ignoring the "Trump risk"? US stocks, bonds, and currencies are being sold off across the board, with the panic index breaking through the 20 mark.

Since the beginning of the year, Wall Street once believed that the market performance was unusually calm. However, as geopolitical tensions surrounding the Greenland issue escalated, cracks appeared in the US-European alliance relationship, and Japanese government bonds faced significant selling pressure, this calm is rapidly being shattered. After experiencing a long weekend holiday, the US market saw a concentrated sell-off. At the opening on Tuesday, the S&P 500 index dropped by more than 1.3%, while the Nasdaq fell by over 1.7%. At the same time, US bonds, the US dollar, and Bitcoin have already weakened. The VIX volatility index, seen as a market fear index, broke through the 20 mark for the first time since November of last year. The widening market volatility indicates that investors' attitude of "selective ignorance" towards a series of shock events is changing. Previously, the financial markets showed strong resilience to events such as the White House's tough actions on the situation in Venezuela and pressure on the Federal Reserve. But the recent trends indicate that the market's resilience is gradually being worn out. The current market anxiety is focused on the US President Trump as he approaches his one-year anniversary in the White House. His stance on controlling Greenland's sovereignty has raised concerns among investors about extreme scenarios, including structural fractures in the NATO alliance and the risk of a new round of comprehensive trade frictions. Krishna Guha, managing director of Evercore ISI's central bank strategy, pointed out in a report that in the base case, the market still tends to bet that some compromise will eventually be reached to control the severity of the situation; but if the situation spirals out of control, the impact will be very strong and may have long-term and far-reaching effects on the US dollar. It is worth noting that just last week, the average volatility of US bond markets, stock markets, and the US dollar was at its lowest level since at least 1990. However, with negative news intensifying, it is justifiable that investors are quickly choosing to adopt a wait-and-see approach. The US Supreme Court is about to rule on Trump's tariff plan, and US Treasury Secretary Benson has also indicated that Trump may announce his nominee for the next Federal Reserve Chairman as soon as next week. Meanwhile, the surge in Japanese government bond yields has further exacerbated market unease. Japan's 40-year government bond yields exceeded 4%, while US 10-year government bond yields also rose by 6 basis points to 4.29%, creating new disruptions to the global interest rate environment. Although the market generally expects the US and Europe to eventually resolve the Greenland dispute through diplomatic means, the uncertainty surrounding the White House's negotiating style continues to erode market confidence. Trump recently even included French champagne on a potential tariff threat list, reigniting tension in transatlantic China Welding Consumables, Inc. Beata Manthey, a strategist at Citigroup, pointed out in a recent report that the increase in tension in transatlantic China Welding Consumables, Inc. relations and rising tariff uncertainty is weakening the short-term investment logic in European stock markets. As a result, she has downgraded her allocation recommendation for the European stock market for the first time in over a year. Previously, investors showed strong resilience to geopolitical tensions, with US stocks continuing to rise in early January. The latest survey by Bank of America shows that investor sentiment has risen to the most optimistic level since July 2021, with cash holdings dropping to historic lows. The bank's "bull-bear indicator" has entered the "extremely bullish" territory, usually seen as a signal to increase hedging and defensive allocations. However, the survey also shows that nearly half of the respondents have not taken any protective measures against a significant stock market correction, the highest proportion since 2018, highlighting the potential underestimation of risk in the current market. Jefferies strategist Mohit Kumar believes that eventually, an agreement may be reached to maintain Greenland's sovereignty while providing the US with more military access. However, he points out that the negotiation process may last for several months, during which time market volatility is likely to remain high. He stated that his portfolio is positioned in defense stocks, financial stocks, and gold to hedge against the risks brought about by the escalation of geopolitical tensions. Alexis Bienvenu, investment manager at La Financire de lchiquier, also expressed similar concerns. He pointed out that there is significant unease in the market about "how far Trump will go" in his new threat strategy. Although historical experience indicates that Trump often starts with high-pressure signals and ultimately returns to negotiations and eases tensions, market confidence is still likely to be repeatedly tested during this process.