Powell charges doesn't torpedo markets

USD: Mar '26 is Up at 98.740.  

Energies: Feb '26 Crude is Up at 60.33.

Financials: The Mar '26 30 Year T-Bond is Lower by 6 ticks and trading at 115.14.

Indices: The Mar '26 S&P 500 emini ES contract is 26 ticks Lower and trading at 7009.50.

Gold: The Feb'26 Gold contract is trading Down at 4593.10.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Up which is not normal, and 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 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 Aussie exchanges.  Currently all of Europe is trading Lower.

Possible challenges to traders                                                  

• NFIB Small Business Index is out at 6 AM EST.  This is Major.  
• Building Permits m/m is out at 8:30 AM EST. This is Major.
• Core CPI m/m is out at 8:30 AM EST. This is Major.
• CPI m/m is out at 8:30 AM EST. This is Major.
• CPI y/y is out at 8:30 AM EST.  This is Major.
• New Home Sales is out at 10 AM EST.  This is Major.
• RCM/TIPP Economic Optimism - tentative. This is Major.       
• 30 Year Bond Auction starts at 1 PM EST.  This is Major.         
• Federal Budget Balance is out at 2 PM EST. This is Major.  
• FOMC Member Barkin Speaks 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 dived Lower at around 8 AM EST with no economic news at that time.   The Dow climbed Higher at around the same time.  Look at the charts below and you'll see a pattern for both assets. The ZT dived Lower at around 8 AM EST and the Dow 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 Short 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 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 Neutral or Mixed bias, but the markets veered to the Upside.  The Dow closed Higher by 29 points and the other indices closed Higher as well.  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

Over the weekend a story emerged that the DOJ was charging the Fed Chair Powell with potential theft concerning a budget overrun on the Federal Reserve Building in DC.  At first it looked as though the markets would dived based upon that but savvy traders know better.   Anyone that the president disagrees with or has a grievance with could potentially be drummed up on charges. In the end the markets did manage to gain ground despite this.