This week’s stock market rout may continue so long as President Donald Trump maintains a tough stance on Greenland, after threatening tariffs on eight NATO allies — though he said Wednesday that he will not use force to acquire the autonomous Danish territory. But at some point, investors expect a reversal from Trump if the financial market pain gets too great. In the past, the U.S. president has used outsized threats as the opening salvo for longstanding negotiations with other nations — as he had with the “liberation day” tariffs back in April — and many expect his barbs against the European nations are intended in the same way. Evercore ISI pinpointed two levels it believes would inflict enough pain on the populace that Trump would need to find an off ramp on his Greenland-linked tariff threat. A rise to 4.5% in the U.S. 10-year Treasury yield, a benchmark for mortgages, etc. (It’s 4.28% right now after Tuesday’s surge.) A fall to 6,500 in the S & P 500, representing another 5% decline from here and a total 7% pullback in the benchmark from its recent record. Trump often refers to the stock market as a barometer of his success in his first year. The S & P 500 turned negative for 2026 on Monday. .SPX 1Y mountain S & P 500, 1 year “The President’s sensitivity to markets as a ‘voting machine” for his policies, is still a long way off the stress that caused Policy Pivots in 2025,” Evercore ISI’s Julian Emanuel wrote in Wednesday note. “We consider 4.5% in the U.S. 10 year yield and 6,500 in the S & P 500 as levels that will prompt policy reassessment.” US10Y 1Y mountain U.S. 10-year Treasury, 1 year On Wednesday, at least, stocks were higher after Trump said at the World Economic Forum in Davos, Switzerland, that he does not plan to use military force to acquire the autonomous Danish territory. The Dow Jones Industrial Average jumped more than 500 points at one point, but was far off those levels by midday. Trump at the same time threatened tariffs of up to 25% on eight NATO members if the island is not ceded. He also added in his speech that the U.S. is carrying the financial and military load for NATO. In turn, European lawmakers suspended a U.S.-E.U. trade agreement. While armed conflict is off the table, the threat of more tariffs and U.S. isolation pushing the U.S. dollar lower and rates higher could mean Trump’s financial markets pain threshold could be soon tested.
