Today's Employment report and numbers are especially important

USD: Dec '23 is Up at 106.100.

Energies: Nov '23 Crude is Up at 82.35.

Financials: The Dec '23 30 Year T-Bond is Down 18 ticks and trading at 110.27.

Indices: The Dec '23 S&P 500 emini ES contract is 25 ticks Higher and trading at 4299.00. 

Gold: The Dec'23 Gold contract is trading Up at 1835.10.  

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 Lower which is not 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.  All of Asia is trading Higher with the exception of the Nikkei exchange.  All of Europe is trading Higher.

Possible challenges to traders

• Average Hourly Earnings m/m is out at 8:30 AM EST. This is Major.

• Non-Farm Employment Change is out at 8:30 AM EST. This is Major.

• Unemployment Rate is out at 8:30 AM EST. This is Major.

• FOMC Member Waller Speaks at 12 noon EST. This is Major.

• Consumer Credit m/m is out at 3 PM EST. This is Major.

Treasuries

Traders, please note that we've changed the Bond instrument from the 30 year (ZB) to the 10 year (ZN). They work exactly the same.  

We've elected to switch gears a bit and show correlation between the 10-year bond (ZN) and the S&P futures contract. The S&P contract is the Standard and Poor's, 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 ZN migrated Higher at around 8:30 AM EST as the S&P hit a High at around the same time. If you look at the charts below the S&P gave a signal at around 8:30 AM and the ZN started its Upward trend.  Look at the charts below and you'll see a pattern for both assets. S&P hit a High at around 8:30 AM and migrated Lower.  These charts represent the newest version of MultiCharts and I've changed the timeframe to a 15-minute chart to display better. This represented a Long opportunity on the 10-year note, as a trader you could have netted about 25 plus ticks per contract on this trade. Each tick is worth $15.625.  Please note: the front month for the ZN is now Dec '23. The S&P contract is now Dec' 23. I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.  

Charts courtesy of MultiCharts built on an AMP platform

ZN - Dec 2023 - 10/05/23

S&P - Dec 2023 - 10/05/23

Bias

Yesterday, we gave the markets a Downside bias as the Bonds and Gold were trading Higher and this usually reflects a Down day. The markets didn't disappoint as all the indices traded Lower yesterday. Given that today is Jobs Friday, our bias is Neutral as the markets have never shown any sense of normalcy on this day.   

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

Commentary

Today's Employment report and numbers are especially important as some of the folks in DC swear that "Bidenomics" is the reason jobs are plentiful and wages have gone up. So today will be the proof so to speak. But frankly this idea of "Bidenomics" is nothing new. It is Keynesian at best and even the ancient Romans used it when the populace was getting restless. Create construction projects to keep the folks occupied and paid. The problem is he didn't invent this nor did he invent anything new.  FDR used it during the Great Depression. As far as wages going up that is only to keep abreast of inflation as no one will or can work for minimum wage. 15 dollar an hour used to be the standard for a living wage, now that number is more like 20 an hour. Unfortunately, President Biden stood by idlily when inflation was running rampant.  He could have called a meeting of all CEO's of the Fortune 1000 and figure out a way to reduce inflation. It wasn't that long ago when each Fortune 1000 company had Vendor Certification programs where they demanded that vendors reduce their prices by x percent. I don't think they did away with that program. This inflation stuff is corporate greed run amuck. During the pandemic when everything was down, no one could raise prices and get away with it. Now that the pandemic is behind us these folks have to justify their multi-million-dollar salaries and bonuses.  If you ask me, they aren't worth it. In essence this is their attempt to make up for lost time and monies during the pandemic.