The Fed Chief will not lower rates without a reason and right now he has none

USD: Sept '25 is Up at 97.165.  

Energies: Aug '25 Crude is Down at 64.95.

Financials: The Sep '25 30 Year T-Bond is Lower by 19 ticks and trading at 113.12.

Indices: The Sep '25 S&P 500 emini ES contract is 100 ticks Higher and trading at 6371.75.

Gold: The Aug'25 Gold contract is trading Down at 3436.10.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is 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 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 Nikkei.  All of Europe is trading Higher.

Possible challenges to traders

• Existing Home Sales is out at 10 AM EST.  This is Major.

• Crude Oil Inventory is out at 10:30 AM EST.  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 climbed Higher at around 8:30 AM EST with no economic reports 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 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 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 - 7/22/25

Dow - Sep 2025- 7/22/25

Bias

Yesterday we gave the markets a Neutral or Mixed bias and the markets didn't disappoint.  The Dow closed 191 points Higher, however the Nasdaq dropped 101 points.  Today we aren't dealing with a correlated market, 

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

Commentary

Yesterday everyone was wondering what the Fed Chair would be discussing, and I thought it might something to do with the impending rumors that Trump wants to fire him.   He discussed none of that but kept the subject matter on cost overruns on the Federal Reserve building renovation work.  It is clear that the Administration is looking for a malfeasance reason to dismiss the Fed Chair, but Powell won't give it to them.  The Administration can't fire him for no reason and Trump hates that.  He wants everyone to be and work in fear.  Just like every dictator wannabe wants.  The Fed Chief will not lower rates without a reason and right now he has none.  Unemployment is not at record highs and inflation isn't unmanageable yet.  This however will change once the tariffs become reality and the Fed is waiting for that.  Want to learn Market Correlation and determine market direction hours before the Opening Bell?