A paltry cut

USD: Sept '25 is Up at 96.615.  

Energies: Nov '25 Crude is Down at 63.64.

Financials: The Dec '25 30 Year T-Bond is Higher by 11 ticks and trading at 117.26.

Indices: The Sep '25 S&P 500 emini ES contract is 237 ticks Higher and trading at 6718.00.

Gold: The Dec'25 Gold contract is trading Down at 3702.30.

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 Mixed.  Currently all of Europe is trading Higher at the moment.

Possible challenges to traders

• Unemployment Claims is out at 8:30 AM EST. This is Major.
• Philly Fed Mfg. Index is out at 8:30 AM EST. This is Major.
• CB Leading Index is out at 10 AM EST. This is Major.
• Natural Gas Storage is out at 10:30 AM EST. This is Major.
• TIC Long Term Purchases m/m 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 took off and went Higher at around 7:30 AM EST with several eco news items 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 around 7:30 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 ticks per contract on this trade.   Each tick is worth $6.25.  Please note: the front month for ZT is now Dec '25 and the Dow is now Dec '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 - 9/17/25

Dow - Sep 2025- 9/17/25

Bias

Yesterday we predicted a Neutral or Mixed Day, and the markets didn't disappoint.  The Dow gained 260 points, but the other indices faltered, and it appears that the Mixed bias was correct.  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

So yesterday the Fed reduced rates by 25 basis points or one quarter of 1 point.  This is paltry at best and then we learn that we can expect perhaps one more rate cut in 2025 and then one more in 2026.  If all of these are 25 basis points it means a reduction of three quarters of one point.  We need far more than this.  The inflation that everyone is feeling stems from the self-imposed tariffs from DC and we the American people will wind up paying for it.  Cmon Mr. Chairman you can do better, and you have done better in the past.