Fed speak day torpedoes markets

USD: Dec '25 is Up at 98.555.  

Energies: Nov '25 Crude is Up at 62.11.

Financials: The Dec '25 30 Year T-Bond is Higher by 15 ticks and trading at 117.08.

Indices: The Sep '25 S&P 500 emini ES contract is 36 ticks Higher and trading at 6770.50.

Gold: The Dec'25 Gold contract is trading Up at 4058.00.

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 Higher and Crude is trading Higher 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. Asia traded Lower with the exception of the Shanghai exchange.  All of Europe is trading Higher.

Possible challenges to traders

• FOMC Member Musalem Speaks at 9:20 AM EST.    Major.
• FOMC Member Barr Speaks at 9:30 AM EST.           Major.
• FOMC Member Goolsbee Speaks at 10 AM EST.       Major.
• Crude Oil Inventory is out at 10:30 AM EST.           Major.
• 10 Year Bond Auction starts at 1 PM EST.               Major.
• FOMC Member Logan Speaks at 1:15 PM EST.        Major.
• FOMC Meeting Minutes is out at 2 PM EST.             Major.
• FOMC Member Kashkari Speaks at 3:15 PM EST.    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 charged Higher at around 8 AM EST with no other economic news in sight.   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 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 - 10/07/25

Dow - Sep 2025- 10/07/25

Bias

Yesterday we gave the markets a Down day and the markets didn't disappoint.  The Dow dropped by 92 points and the other indices dropped as well.  Today we aren't dealing with a correlated market, and our bias is Neutral or Mixed.

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

Commentary

Yesterday we had 5 FOMC Members speaking yet apparently no one has anything positive to say about the markets.  Now we're hearing farmers across this country who will have a very bad year as many had grown soybeans that were sold to China.  China is now buying them from Brazil and Argentina as they don't like the tariff policies of the US.