For Chinese investors, last night's closing was quite misleading, as if nothing had happened. Only by closely monitoring the market can one feel the tense atmosphere. 1. Investors are most concerned about the U.S. stock market, which closed almost unchanged—the Dow Jones Industrial Average rose by 0.04%, the S&P 500 index fell by 0.09%, and the Nasdaq index fell by 0.10%. The fluctuations are not really important; what matters is the sudden drop in volatility, which is somewhat reassuring. However, the performance of one trading day does not indicate much; Friday's closing will be crucial. 2. Gold also saw a slight increase. However, looking at the 1-hour chart, the intraday performance was not calm, with gains of nearly $40 during the Asian and European trading sessions almost entirely retraced in the evening. In fact, the U.S. stock market experienced a similar situation, rising at one point during the day but closing basically flat, as if nothing had happened. 3. The movements of the U.S. dollar index and U.S. Treasury yields clearly indicate that calmness can be misleading. * The U.S. dollar index rose for the second consecutive trading day, reaching a high of 108, close to the peak in November 2022. Meanwhile, the 10-year U.S. Treasury yield closed at 4.56%, marking a new high for nine consecutive days; the last time there was a streak of ten consecutive days of increases was in 1978. The high levels of the dollar and Treasury yields are burdens that investors cannot bear. * At the same time, the VIX, Wall Street's fear index, has retreated after reaching a five-and-a-half-month high, closing at 24.09, still above the warning line of 20

For Chinese investors, last night's closing was quite misleading, as if nothing had happened. Only by closely monitoring the market can one feel the tense atmosphere.

Investors are most concerned about the U.S. stock market, which closed almost unchanged—the Dow Jones Industrial Average rose by 0.04%, the S&P 500 index fell by 0.09%, and the Nasdaq index fell by 0.10%. The fluctuations are not really important; what matters is the sudden drop in volatility, which is somewhat reassuring. However, the performance of a single trading day does not indicate much; Friday's closing will be crucial.
Gold also saw a slight increase. However, looking at the 1-hour chart, the intraday performance was not calm, with gains of nearly $40 during the Asian and European trading sessions almost entirely retraced in the evening. The U.S. stock market experienced a similar situation, briefly rising during the day but closing basically flat, as if nothing had happened.
The movements of the U.S. dollar index and U.S. Treasury yields clearly indicate that calmness can be misleading.

\* The U.S. dollar index rose for the second consecutive trading day, reaching a high of 108, close to the peak in November 2022. Meanwhile, the 10-year U.S. Treasury yield closed at 4.56%, marking a new high for nine consecutive days; the last time it rose for ten consecutive days was in 1978. The U.S. dollar and Treasury yields remain high, which is a heavy burden for investors.

\* At the same time, the VIX, Wall Street's fear index, has retreated after reaching a five-and-a-half-month high, closing at 24.09, still above the warning line of 20. All of this reminds us that the market is tense, as we have already experienced such significant volatility.

There were no new driving factors last night; the GDP (revised from the previously reported 2.8% to a growth of 3.1%) and the number of initial jobless claims (which fell more than expected) align with the Federal Reserve's views, indicating that the Fed has foresight. Today's focus is on the U.S. November core PCE data (the Fed's preferred inflation indicator), which typically would not provoke a strong market reaction, as there are rarely significant deviations from market expectations. However, the Fed has once again elevated its focus on inflation to a new level this week, so this data is likely to trigger sensitive nerves in the market

The world suddenly falls silent, holding its breath for today's PCE