FOMC Day

USD: Dec '25 is Up at 98.630.  

Energies: Dec '25 Crude is Up at 60.37.

Financials: The Dec '25 30 Year T-Bond is Lower by 4 ticks and trading at 118.30.

Indices: The Dec '25 S&P 500 emini ES contract is 65 ticks Higher and trading at 6942.00.

Gold: The Dec'25 Gold contract is trading Up at 4039.90.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Up which is not normal, but 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 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. All of Asia traded Mixed.  Currently Europe is trading Mixed.

Possible challenges to traders                                                

• Pending Home Sales is out at 10 AM EST.  Major.
• Crude Oil Inventories is out at 10:30 AM EST.  Major.
• Federal Funds Rate is out at 2 PM EST. Major.
• FOMC Statement is out at 2 PM EST.  Major.
• FOMC Press Conference starts at 2:30 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 dived Lower at around 8:30 AM EST with no economic news reported.   The Dow climbed Higher at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow climbed Higher at around 8:30 AM EST and the ZT dived Lower 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 plus 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 -Dec 25 - 10/28/25

Dow - Dec 2025- 10/28/25

Bias

Yesterday we gave the markets an Upside bias but the markets traded Mixed.  The Dow dropped about 100 points, but the other indices did gain on the session.  Today given that it is FOMC Day, our bias is Neutral or Mixed.

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

Commentary

So, another FOMC Day is upon us and the age-old question is will the Fed reduce rates?  At this juncture I think they will but only by 25 basis points or one quarter of one percent.  Not much to speak of but we think the pressure is on the Fed to reduce, the markets expect it so they may cave in.