Holiday doesn't propel markets

USD: Sept '25 is Up at 98.370.  

Energies: Oct '25 Crude is Up at 65.76.

Financials: The Dec '25 30 Year T-Bond is Lower by 11 ticks and trading at 113.12.

Indices: The Sep '25 S&P 500 emini ES contract is 188 ticks Lower and trading at 6427.25.

Gold: The Dec'25 Gold contract is trading Up at 3553.40.

Initial conclusion

This is a nearly 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 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. All of Asia traded Lower except the Nikkei exchange.  Currently all of Europe is trading Lower.

Possible challenges to traders

• Final Manufacturing PMI is out at 9:45 AM EST.  This is Major.
• ISM Manufacturing PMI is out at 10 AM EST.  This is Major.
• ISM Manufacturing Prices is out at 10 AM EST.  This is Major.
• Construction Spending is out at 10 AM EST.  This is Major.
• RCM/TIPP Economic Optimism is out at 10 AM 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.

Last Friday the ZT dived Lower at around 8:30 AM EST with various news items pending.  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 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 - 8/29/25

Dow - Sep 2025- 8/29/25

Bias

Last Friday we gave the markets a Neutral or Mixed bias, but the markets dived Lower.  The Dow dropped 92 points, and the other indices lost ground as well.  Today we are dealing with a nearly correlated market, and our bias is to the Downside.

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

Commentary

Well, now it seems that anything we buy overseas or via the Internet will now be charged a tariff.  Up until Friday anything less than $800 wasn't charged any duty or tariff.  Unfortunately, that ended and the markets took notice.