The United States has released a rather impressive set of economic data, yet for some inexplicable reason, it has turned into a significant bearish factor.

In the early hours of today, U.S. stocks plummeted, with the Dow Jones Industrial Average falling by 700 points, marking the largest decline so far this year.

A few days ago, U.S. Treasuries had already shown signs of heading downward again, and after the release of last night's economic data, the pace of the decline in U.S. Treasuries accelerated.

In the currency market, the exchange rate of the Chinese yuan against the U.S. dollar also fell, seemingly on the verge of breaking through the 6.90 threshold.

It is evident that the Federal Reserve is looking to intensify its harvesting plans, causing panic across global financial markets.

01, Bullish or Bearish

S&P Global has released the latest PMI data for the United States, which serves as an important barometer of the economy.

The most recent figures indicate that the U.S. service sector has once again climbed back above 50. Concurrently, the composite PMI index has also surpassed 50. These undoubtedly signal that the U.S. economy has returned to a state of expansion.

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Amidst the Federal Reserve's continuous interest rate hikes, the economic community has been debating when the United States will fall into a recession, but it appears that a recession has not materialized.

In recent days, investors in U.S. stocks also seem to have lost interest in discussing whether the U.S. will have a hard or soft landing. Instead, there is a growing consensus that the U.S. economy will experience a no-landing scenario, meaning there will be no significant downturn but rather continued expansion.These are undoubtedly good news for the economy, but they have turned into bad news for investments.

The current investment logic is quite peculiar. If the U.S. economy is not doing well, then everyone believes that the Federal Reserve has no choice but to stop raising interest rates, or even lower them to stimulate the economy, hence the stock market would rise as a result.

However, things are not going as expected. The U.S. economy seems to be performing quite well, and there are signs that inflation is on the rise again. As a result, the Federal Reserve has repeatedly emphasized that it will maintain higher interest rates, making a rate cut seem unlikely and even suggesting the possibility of further rate hikes.

This is the biggest bad news!

02, Sharp decline in U.S. stocks

Affected by this economic data, U.S. stocks experienced a significant drop last night.

In fact, U.S. stocks had already been slowly declining in the days leading up to this. On Tuesday last week, the Dow Jones Industrial Average reached a high of 34,330 points, but by Friday's close, it had fallen to 33,820 points.

U.S. stocks were closed on Monday this week, but when they opened on Tuesday, they gaped down, and by the close, they had dropped to 33,129 points, a decline of nearly 700 points for the day. Compared to last Tuesday, the drop was 1,200 points.

In the early hours of today, the Nasdaq Composite Index saw an even larger decline, falling by 2.5%.

A host of tech giants also fell. Tesla's drop was as high as 5.25%. Apple, Google, and Amazon all saw declines close to 2.7%, and Microsoft also fell by 2.1%.The NASDAQ Golden Dragon China Index, which reflects the trend of Chinese concept stocks, also saw a decline, with a drop of 2.9% last night, exceeding the decline of the NASDAQ Index.

Among them, JD.com plummeted by 11%, and Pinduoduo also fell by 9.5%.

Compared to the ups and downs of the stock market, the decline in U.S. Treasury bonds is more concerning.

The most watched 10-year U.S. Treasury bond saw its yield rise above 3.9% last night, approaching the 4.0% mark once again.

The yield on the 2-year U.S. Treasury bond has already broken through 4.2%, and the yield continues to be significantly higher than that of the 10-year Treasury bond, with the inversion remaining consistent.

If we observe the U.S. Treasury bonds with a 6-month term, the yield has already broken through 5%, then the phenomenon of the inversion of long and short bonds becomes even more apparent.

03, Chinese Yuan Depreciation

Due to the ongoing overheating of the U.S. economy and the continued failure to effectively reduce inflation, the market expects the Federal Reserve to possibly intensify its rate hikes.

In fact, from another perspective, this is also an intensification of the plan to reap global benefits.

Affected by this, the U.S. Dollar Index has resumed its rise, from a previous low close to the 100 mark to now rising back above 104. The result is that non-U.S. currencies have fallen again.The Chinese yuan has depreciated in recent days, breaking through the 6.89 mark and currently testing the 6.90 threshold.

However, upon reviewing previous interest rate hikes by the Federal Reserve, it is observed that the pace of the yuan's appreciation tends to accelerate after the announcement of the rate hike. Therefore, the interest rate hike by the Federal Reserve in March could be a signal for the yuan to strengthen further.