Chaos rules

USD: Jun '25 is Up at 98.895.  

Energies: Jul '25 Crude is Up at 62.69.

Financials: The Sep '25 30 Year T-Bond is Higher by 20 ticks and trading at 112.18.

Indices: The Jun '25 S&P 500 emini ES contract is 92 ticks Lower and trading at 5924.25.

Gold: The Aug'25 Gold contract is trading Down at 3381.10.

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 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 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 Mixed.  All of Europe is trading Mixed as well.

Possible challenges to traders

• Jolts Job Openings is out at 10 AM EST.  This is Major.
• Factory Orders m/m is out at 10 AM EST.    This is Major.
• RCM/TIPP Economic Optimism is tentative.  This is Major.
• Wards Total Vehicle Sales - All Day by Brand.  This is Major.
• FOMC Member Goolsbee Speaks at 12:45 PM EST.  This is Major.
• FOMC Member Cook Speaks at 1 PM EST.  This is Major.
• FOMC Member Logan Speaks at 3:30 PM 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 slid Lower at around 8 AM EST with no real news to speak of.  The Dow climbed Lower at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 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 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 ZT is now Sep '25 and the Dow is still Jun '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 2025 - 6/02/25

Dow - Jun 2025- 5/30/25

Bias

Yesterday we gave the markets a Down bias, but the markets traded Mixed.  The Dow dropped 4 points on the session, but the other indices traded Higher.  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

This market of late runs on tariff news or not.  No one really knows if the tariffs will take place as apparently Trump likes to bluff.  But he is gambling with the American economy. I hope he is right and knows what he's doing as the results could be dire for Americans in terms of inflation and higher prices.