Trump's Greenland threats could force Treasury-bond investors to 'quiet quit,' CEO of $200 billion asset manager says

• Trump could see pushback from the bond market on his new tariffs, the CEO of TCW says.
• Katie Koch said bond investors could "quiet quit" the market for US debt and diversify from US asets.
• Foreign investors have been shifting from the US for the last decade, a trend Koch thinks is accelerating.

The "Sell America" trade could get worse if global investors are further shaken by Donald Trump's latest tariff threats.

Katie Koch, a former partner at Goldman Sachs and the CEO of the $200 billion asset manager TCW Group, said she thinks investors could be on the verge of "quiet quitting" the US bond market.

That's because many foreign investors feel they're overexposed to the US and are wary of some of the President's new policies — like Trump's threat to slap a 10% tariff on European nations if Greenland isn't up for sale within the next few weeks, she suggested, citing her conversations with other asset managers at the World Economic Forum.

The shift away from the US could happen quietly, Koch said, as investors looking to unwind their positions won't "scream it from the rooftops."

"I think we're going to see some quiet quitting of the US bond market, and that I'm worried about," Koch said, speaking to CNBC on the sidelines at Davos Tuesday. "I expect that investors will continue to look to diversify," she later added.

"Sell America" has been a lingering concern for investors over the past year as markets have taken in Trump's ambitious tariff and geopolitical plans. The worry is that policy uncertainty and fears of higher inflation and rising deficits could cause more investors to dump US assets, a move that, in the bond market, could cause rates to rise as a higher yield is needed to entice investors.

Markets already saw a "Sell USA" day on Tuesday, Koch said, referring to the steep sell-off in US equities and government bonds as investors sought to reduce their exposure to the US. The benchmark 10-year US Treasury yield, a reflection of long-term interest rates in the economy, jumped 5 basis points.

Bonds from countries like Japan, Europe, and various emerging markets now look more attractive for bond investors than US Treasurys, Koch added.

Other market commentators have their eye on how the bond market could react to Trump's policy changes. Bond vigilantes — investors who protest what they see as negative developments in the market by selling Treasurys to drive up yields — threw a major tantrum about the president's Liberation Day tariffs last year, a move that ultimately prompted Trump to walk back many of his tariff threats.

A bigger sell-off in Treasurys could be prompted if the "sell America" gains more traction, Capital Economics said in a note on Wednesday.

"The administration's goal is to have lower interest rates to aid US households and businesses, which is hard to achieve if bond vigilantes send rates on the long-end of the yield curve higher," Hardika Singh, an economic strategist at Fundstrat Research, wrote in a client note.