China gets a 90 day reprieve

USD: Sept '25 is Down at 97.585.  

Energies: Sep '25 Crude is Down at 62.65.

Financials: The Sep '25 30 Year T-Bond is Higher by 20 ticks and trading at 115.09.

Indices: The Sep '25 S&P 500 emini ES contract is 50 ticks Higher and trading at 6481.00.

Gold: The Dec'25 Gold contract is trading Down at 3413.60.

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Down which is not normal, but 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 not correlated with the US dollar trading Down.  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 traded Higher except the Aussie exchange.  Currently Europe is trading Higher.

Possible challenges to traders

• FOMC Member Barkin Speaks at 8 AM EST.  This is Major.
• Crude Oil Inventories is out at 10:30 AM EST.  This is Major.
• FOMC Member Goolsbee Speaks at 1 PM EST.  This is Major.
• FOMC Member Bostic Speaks at 1:30 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 climbed Higher at around 8:30 AM EST with the CPI data 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 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 30 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 - 8/12/25

Dow - Sep 2025- 8/12/25

Bias

Yesterday we gave the markets a Neutral or Mixed bias and the markets climbed Higher. The Dow climbed 484 points, and the other indices gained ground as well.  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

Yesterday we had CPI numbers that weren't terrible but weren't great either.  It seems inflation is stuck and doesn't seem to go lower.  Also China gets another 90 days before tariffs kick in.  I think Trump wants to see an interest rate reduction before China gets hit.