Markets reverse course – Somewhat

USD: Sept '25 is Up at 96.755.  

Energies: Aug '25 Crude is Up at 66.27.

Financials: The Sep '25 30 Year T-Bond is Lower by 21 ticks and trading at 114.23.

Indices: The Jun '25 S&P 500 emini ES contract is 12 ticks Lower and trading at 6246.00.

Gold: The Aug'25 Gold contract is trading Up at 3352.50.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Up which is not normal, but the 30 Year T-Bond is trading Lower.  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 Higher which is correlated. Gold is trading Higher which is not 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 Mixed.  All of Europe is trading Higher.

Possible challenges to traders

• Challenger Job Cuts y/y is at 7:30 AM EST.  This is Major.
• Final Manufacturing PMI is out at 9:45 AM EST.  This is Major.
• ADP Non-Farm Employment Change is out at 8:15 AM EST.  This is Major.
• Crude Oil Inventories is out at 10:30 AM EST.  This is Major.
• RCM/TIPP Economic Optimism is tentative.  This is 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 dived Lower at around 9 AM EST with no pending news.  The Dow climbed Higher at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow climbed Higher at 9 AM EST and the ZT dived Lower 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 Short opportunity on the 2-year note, as a trader you could have netted about a dozen plus ticks per contract on this trade.   Each tick is worth $6.25.  Please note: the front month for ZT is now Sep '25 and the Dow is now Sep '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 - 7/01/25

Dow - Sep 2025- 7/01/25

Bias

Yesterday we gave the markets a Downside bias and the indices didn't disappoint as the Dow closed Lower by 49 points and the other indices closed Lower as well.  Today our bias is Mixed or Neutral.

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

Commentary

Yesterday the Senate in DC passed the BBB bill and it now heads to the House where they will review all the changes made to the bill and decide if those changes are feasible.   It's true that Trump wants a bill to sign by Friday, July 4th but at this point that may not be doable.  Time will tell in that regard.