Fed’s Kashkari says bond yields are rising and dollar show investors are moving out of the US

Minneapolis Federal Reserve President Neil Kashkari said on Friday that recent market trends have shown investors are moving away from the US as the safest place to invest.

In an interview with CNBC’s “Squawk Box” he said this trend is against what you normally see as Treasury’s yields have risen and the US dollar has been hitting global counterparts against global counterparts these days.

“We would have normally expected the dollar to rise if there were big tariffs increase. I think the fact that the dollar is falling simultaneously gives more credibility to the story of changing investor preferences,” Kashkari said.

After Trump announced his intention to slap a full 10% tariff on U.S. trading partners, financial yields surged this week, threatening to even place more stringent taxes on Wednesday.

at the same time, Green Back It beats over 3% against a basket of global currencies, and the movement could mean a turn from a safe US asset.

“Investors around the world have seen America as the best place to invest. If that’s true, we have a trade deficit. So now we have a lower yield across the US asset class,” Kashkari said. “If the trade deficit decreases, what investors are saying is that America is no longer the most attractive place to invest, and we expect bond yields to rise.”

However, Kashkari pointed out that he sees “stress” but not a major shift in market functioning.

Kashkari will not vote for the federal government’s open market committee this year, but will vote in 2026. He noted that his focus in the current environment reflects statements from other policymakers who are less likely to move rates until they are fixed inflation expectations and have clear visibility into fiscal and trade policies.

Get tickets to Pro Live

Join the New York Stock Exchange!
An uncertain market? Earn Edge with CNBC Pro Live, the first exclusive event on the historic New York Stock Exchange.

Access to expert insights is paramount in today’s dynamic financial situation. As a CNBC Pro subscriber, we recommend attending the first exclusive and in-person CNBC Pro live event held at the iconic NYSE on Thursday, June 12th.

Join our interactive professional clinic led by professional Carter Worth, Dan Niles and Dan Ives. You will also get the opportunity to network with CNBC experts, talent and other pro subscribers during exciting cocktail hours on the legendary trading floor. Tickets are limited!