The market has been pricing in the potential worst-case scenario in advance, and Monday's market action was particularly nerve-wracking: all U.S. stocks fell, gold dropped below $4,200, Bitcoin briefly dipped below $90,000, and U.S. crude oil also fell below the 50-day moving average to under $60. The declines weren't huge, but the risks were obvious—U.S. Treasury yields and the dollar both rose, essentially indicating that everyone is rushing to sell high-risk assets and move funds to safe havens.

This downturn wasn't without reason—there were plenty of catalysts. First, the sharp drop in the Japanese bond market impacted U.S. Treasuries, with the 10-year U.S. Treasury yield rising to 4.16%, approaching recent highs. Second, the market now believes that even if the Federal Reserve cuts rates, it will be a "hawkish cut," meaning there won't be any promises of further easing—it's not a policy shift, just a minor technical adjustment. More crucially, comments from Hassett, a top candidate for Fed Chair, directly tanked market sentiment. He said that committing to a six-month rate plan is irresponsible and that the Fed will only adjust and explain actions based on data. After these remarks, traders immediately lowered their expectations for rate cuts in 2026 from three times to two. The core of his message is the Fed's future stance: no guarantees, no clear commitments, and no aggressive easing. This has a bigger impact than the size of any immediate rate cut and also helps him shed his association with Trump.

Fearing further declines and a domino effect, Trump quickly released positive news to support the market, saying that details are being finalized for allowing Nvidia's H200 chips to be exported to China, which helped stabilize the U.S. stock market's losses somewhat. But this was policy intervention halting the drop, not a real improvement in market trends.

In the end, there wasn't a major event yesterday; rather, everyone is waiting to see if any bad news emerges on Wednesday, so volatility wasn't extreme, but the sense of panic is rising. The good news is that the market is already factoring in and digesting the potential worst-case scenario in advance.