This is not a correlated market. The USD is Down and Crude is Up which is normal, and 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 Higher which is correlated. Gold is trading Higher which is 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. Asia is trading Higher with the exception of the Shanghai and Sensex exchanges which are Lower. Currently all of Europe is trading Mixed.

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.
FOMC Member Bowman Speaks at 10:10 AM EST. This is Major.
Wards Total Vehicle Sales - All Day by Brand. This is Major.
FOMC Member Williams Speaks at 12 noon. This is Major.
FOMC Member Mester Speaks at 12:05 PM EST. This is Major.
FOMC Member Daly Speaks at 1:30 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 Lower at around 8:45 AM EST as the S&P hit a Low at around the same time. If you look at the charts below the S&P gave a signal at around 8:45AM and the ZN started its Downward slide. Look at the charts below and you'll see a pattern for both assets. S&P hit a Low at around 8:45 AM and migrated Higher. 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 Short opportunity on the 10-year note, as a trader you could have netted about 30 plus ticks per contract on this trade. Each tick is worth $15.625. Please note: the front month for both the ZN and the S&P are now Jun '24. 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 -Jun 2024 - 04/01/24

S&P - Mar 2024 - 04/01/24

Bias

Yesterday we gave the markets a Neutral or Mixed bias as we didn't see much in the way of Market Correlation yesterday. The markets veered to the Downside despite a 3-day holiday weekend. The Dow dropped 241 points; the S&P dropped 11 but the Nasdaq eked out a meager gain of 17. Today we aren't dealing with a corelated market and our bias is Neutral.

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

Commentary

Ordinarily after a 3-day holiday weekend we usually see a spike in demand as traders are anxious to get back in the markets. That didn't happen this time around and I suspect the fact that yesterday was Easter Monday and in many parts of the world that is celebrated. The markets dropped yesterday with only the Nasdaq managing a 17-point gain. Today we have Jolts Job Openings which will dovetail nicely with Friday's Job report. We also have Factory Orders as well as Total Auto Sales for the month. Will this help to push the markets in the right direction? Only time will tell...

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.