Job numbers don't cut it

Nick Mastrandrea Market Tea Leaves

USD: Sep '26 is Up at 99.585.

Energies: Sep '26 Crude is Up at 79.39.

Financials: The Sep '26 30 Year T-Bond is Higher by 1 tick and trading at 109.13.

Indices: The Jun '26 S&P 500 emini ES contract is 25 ticks Higher and trading at 7786.00.

Gold: The Aug'26 Gold contract is trading Down at 4397.20.

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 Lower 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 goes Up the other goes Down. Asia traded Mixed. All of Europe is trading Higher.

Possible challenges to traders

Cleveland Fed Inflation Expectations is Tentative. Major.
Lack of major economic news.

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.

On Friday the ZT dived Lower at around 8:30 AM EST after the job numbers were released. The Dow climbed Higher at around the same time. Look at the charts below and you'll see a pattern for both assets. The ZT dived Lower at around 8:30 AM EST and the Dow climbed Higher 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 20 plus ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for the ZT is now Sep '26. I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of barcharts

Bias

On Friday we gave the markets a Neutral or Mixed bias as it was Jobs Friday but the US economy lost 23,000 jobs last month yet the markets show a gain on Friday. How is that? I suspect the reason is because everyone anticipates a Fed rate cut in the near future. It is certainly needed in this environment. Today our bias is Neutral or Mixed.

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

Commentary

On Friday, the Dow posted a gain of 152 points, and the other indices showed a gain as well.

Author

Nick Mastrandrea

Market Tea Leaves

Nick Mastrandrea over 20 years experience in trading and formerly held a NASD Series 7. He currently holds a NJ Life, Health and Variable Authority. Nick is a published writer and his work has appeared in Futures Magazine, TraderPlanet and others.

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