In a CNBC interview Friday, Minneapolis Federal Reserve President Neel Kashkari raised concerns that investor sentiment may be shifting away from the U.S., citing unusual market movements amid ongoing trade tensions.

What To Know: Treasury yields have surged while the dollar has weakened-an atypical reaction during geopolitical uncertainty. "Normally, when you see big tariff increases, I would have expected the dollar to go up. The fact that the dollar is going down... lends some more credibility to the story of investor preferences shifting," Kashkari told CNBC's Squawk Box.

Kashkari noted that global investors have long viewed the U.S. as a safe haven, but that perception may be changing. "If the trade deficit is going to go down, it could be that investors are saying, OK, America no longer is the most attractive place in the world to invest," he told CNBC, adding that higher bond yields could be a reflection of this shift.

What Else: The interview Friday came amid new inflation data showing a 0.4% drop in March's Producer Price Index-its steepest monthly decline since 2023-yet Treasury yields rose sharply.

The 10-year yield this week climbed to 4.50%, and the 30-year reached 4.92%, defying expectations of a fall amid disinflationary signals.

Despite not voting on the Federal Open Market Committee this year, Kashkari emphasized his focus remains on keeping inflation expectations anchored, stating, "We're seeing stresses, but not dislocations."