The recent drop happened because the 10-year U.S. Treasury yield surged violently, reaching 5.087%. The triggers behind this include the newly released U.S. PMI data, with the September composite index rising from last month's 56 to 58.4, and the business input cost index climbing from 59.9 to 66.4. In plain terms, businesses are getting more orders and doing better, but costs are rising faster too. The stronger the economy performs, the more confident the Fed is to continue raising interest rates. Meanwhile, rising costs make the market worry that inflation won’t come down easily. For U.S. stocks, higher Treasury yields mean investors will demand higher returns from stocks. With the same profit expectations, it becomes harder for funds to accept the original stock prices. Additionally, the cost of issuing new debt or refinancing maturing debt for companies may increase, especially for those still borrowing heavily to expand—they’ll need to generate more income in the future to cover interest payments. Bitcoin and other cryptocurrencies will also feel the impact of this environment. As investors demand higher returns and become less willing to tolerate volatility, the appetite for chasing higher prices may decrease. So even though the next Fed meeting hasn’t happened yet, the market can already push up the cost of long-term borrowing. Don’t assume that the impact of the last rate hike is over just because it’s been implemented. Next, we’ll need to watch whether the 10-year yield can pull back or if it will stay above 5% and continue climbing. If we also factor in rising oil prices, the market will have to digest the combined impact of higher energy costs and sustained high interest rates. This will add more resistance to any rebound in U.S. stocks and the crypto market. One @Gate, trade more markets.