News tsunami derails markets

USD: Mar '26 is Up at 98.975.  

Energies: Feb '26 Crude is Down at 59.80.

Financials: The Mar '26 30 Year T-Bond is Higher by 1 tick and trading at 116.10.

Indices: The Mar '26 S&P 500 emini ES contract is 88 ticks Higher and trading at 6988.00

Gold: The Feb'26 Gold contract is trading Down at 4619.10.

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 Higher and Crude is trading Lower which is 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 except the Sensex and Shanghai exchanges.  Currently all of Europe is trading Mixed at this time.

Possible challenges to traders

• Unemployment Claims are out at 8:30 AM EST. This is Major.
• Empire State MFG Index is out at 8:30 AM EST. This is Major.
• Philly Fed MFG Index is out at 8:30 AM EST. This is Major.
• Import Prices m/m is out at 8:30 AM EST. This is Major.
• FOMC Member Bostic Speaks at 8:35 AM EST. This is Major.       
• FOMC Member Barr Speaks at 9:15 AM EST. This is Major. 
• Natural Gas Storage is out at 10:30 AM EST. This is Major.
• FOMC Member Barkin Speaks at 12:40 PM.This is Major.
• FOMC Member Schmid Speaks at 1:30 PM. This is Major.
• TIC Long Term Purchases is out at 4 PM EST. This is not 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 climbed Higher at around 9:15 AM EST with the all-important PPI data released at that time.   The Dow dived Lower at around the same time.  Look at the charts below and you'll see a pattern for both assets. The ZT climbed Higher at around 9:15 AM EST and the Dow 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 Long 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 the ZT and YM are both Mar '26.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of barcharts

Bias

Yesterday we gave the markets a Downside bias, and the markets didn't disappoint.  The Dow closed Lower by 42 points and the other indices closed Lower as well.  The Nasdaq dropped 238 points.  Today we aren't dealing with a correlated market, and our bias is to the Upside.

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

Commentary

Yesterday we made a call for the markets to go down, and it did so hours before the markets opened.  As suggested the markets did go down.  The news out of DC isn't too encouraging and we believe this helped to derail the markets.