Fed speak day

USD: Sept '25 is Down at 97.115.  

Energies: Nov '25 Crude is Down at 62.01.

Financials: The Dec '25 30 Year T-Bond is Higher by 3 ticks and trading at 116.14.

Indices: The Sep '25 S&P 500 emini ES contract is 70 ticks Lower and trading at 6705.00.

Gold: The Dec'25 Gold contract is trading Up at 3762.20.

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Down which is not normal, but the 30 Year T-Bond is trading Higher.  The Financials should always correlate with the US dollar such that if the dollar is Higher, then the bonds should follow and vice-versa. The S&P is Lower and Crude is trading Lower which is not correlated. Gold is trading Higher which is correlated with the US dollar trading Down.  I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open. Asia traded Mixed.  Europe is trading Lower except the London exchange.

Possible challenges to traders

• FOMC Member Williams Speaks at 9:45 AM EST.  This is Major.
• FOMC Member Musalem Speaks at 10 AM EST.  This is Major.
• FOMC Members Miran, Barkin and Hammack all speak at 12 Noon EST.  Major.

Traders, please note that we've changed the Bond instrument from the 10 Year (ZN) to the 2 Year (ZT).  They work exactly the same.

We've elected to switch gears a bit and show correlation between the 2-year Treasury notes (ZT) and the S&P futures contract.  The YM contract is the Dow Jones Industrial Average, and the purpose is to show reverse correlation between the two instruments.  Remember it's likened to a seesaw, when up goes up the other should go down and vice versa.

On Friday the ZT took off and went Higher at around 8:30 AM EST with no real eco news items pending.  The Dow dived Lower at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow dived Lower at around 8:30 AM EST and the ZT climbed Higher at around the same time.  These charts represent the newest version of Bar Charts, and I've changed the timeframe to a 15-minute chart to display better.  This represented a Long opportunity on the 2-year note, as a trader you could have netted about 20 plus ticks per contract on this trade.   Each tick is worth $6.25.  Please note: the front month for ZT is now Dec '25 and the Dow is now Dec '25.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of barcharts

ZT -Sep 25 - 9/19/25

Dow - Sep 2025- 9/19/25

Bias

On Friday we suggested a Neutral or Mixed Day, and the markets didn't disappoint. All indices except the Russell 2000 traded Higher. The Russell closed fractionally Lower.  Today we aren't dealing with a correlated market and our bias is to the Downside.

Could this change? Of Course. Remember anything can happen in a volatile market.

Commentary

So, it seemed as though the rate cut rally still had some steam in it on Friday as the indices closed Higher (with the exception of the Russell 2000 which closed 19 points Lower).  Today we have about 5 FOMC members speaking which could drive the markets in any direction.