Fed speak day two

USD: Dec '25 is Up at 98.660.  

Energies: Nov '25 Crude is Down at 62.20.

Financials: The Dec '25 30 Year T-Bond is Higher by 11 ticks and trading at 117.05.

Indices: The Dec '25 S&P 500 emini ES contract is 1 tick Lower and trading at 6801.00.

Gold: The Dec'25 Gold contract is trading Down at 4060.50.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is normal, and 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 Lower which is correlated with the US dollar trading Up.  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 Higher with the exception of the Hang Seng exchange.  Europe is trading Mixed.

Possible challenges to traders

• Fed Chair Powell Speaks at 8:30 AM EST. Major.

• Unemployment Claims are out at 8:30 AM EST. Major.

• FOMC Member Bowman Speaks at 8:35 AM EST. Major.

• Factory Orders m/m Tentative   Major.

• Final Wholesale Inventory m/m Tentative. Major.

• Natural Gas Storage is out at 10:30 AM EST. Major.

• FOMC Member Barr Speaks at 12:45 PM EST. Major.

• 30 Year Bond Auction starts at 1 PM EST. Major.

• FOMC Member Bowman Speaks at 3:45 PM 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.

Yesterday the ZT charged Higher at around 7:30 AM EST with no other economic news in sight.   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 7:30 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 a dozen 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 - 10/08/25

Dow - Sep 2025- 10/08/25

Bias

Yesterday we gave the markets a Mixed day and the markets didn't disappoint.  The Dow dropped by 2 points but the other indices gained ground.  Today we aren't dealing with a correlated market and our bias is Neutral or Mixed.

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

Commentary

Yesterday we again had 5 FOMC Members speaking yet apparently no one has anything positive to say about the markets.  Today we hear from Fed Chair Powell so perhaps he will have something enlightening to say.  But as always only time will tell.  Want to learn Market Correlation and determine market direction hours before the Opening Bell?