Fed’s Kashkari says rising bond yields, falling dollar show investors are moving on from the U.S.

Minneapolis Federal Reserve President Neel Kashkari recently discussed the shifting trends in the market amidst President Donald Trump’s escalating trade war. During an interview on CNBC’s “Squawk Box,” Kashkari highlighted how investors are moving away from the U.S. as the safest place to invest, leading to a rise in Treasury yields and a decline in the value of the U.S. dollar against other global currencies.

In a surprising turn of events, Kashkari noted that despite the imposition of tariffs, the U.S. dollar was depreciating instead of strengthening. This phenomenon, according to Kashkari, indicates a shift in investor preferences away from safe-haven U.S. assets. The recent surge in the 10-year Treasury yield following Trump’s tariff announcements further supports this notion.

Kashkari explained that historically, investors have viewed America as the best place to invest, leading to a trade deficit. However, if investors are now turning their attention elsewhere, it could result in higher bond yields in the U.S. as the trade deficit decreases. While Kashkari acknowledged some “stresses” in the market, he emphasized that there were no significant disruptions in market functioning.

Although Kashkari does not have a voting role on the Federal Open Market Committee this year, he will have a vote in 2026. In the current environment, his focus is on maintaining anchored inflation expectations and monitoring fiscal and trade policies before considering any adjustments to interest rates.

In conclusion, the evolving market dynamics reflect a changing landscape for investors as they seek alternative opportunities outside the U.S. Kashkari’s insights shed light on the potential implications of these trends on bond yields and the broader financial market. As uncertainties persist, staying informed and adapting to the evolving market conditions will be crucial for investors and policymakers alike.