Job numbers don't propel markets

Nick Mastrandrea Market Tea Leaves

USD: Sep '26 is Down at 98.935.

Energies: Oct '26 Crude is Up at 94.01.

Financials: The Sep '26 30 Year T-Bond is Lower by 10 ticks and trading at 108.12.

Indices: The Sep '26 S&P 500 emini ES contract is 68 ticks Lower and trading at 7706.00.

Gold: The Dec'26 Gold contract is trading Down at 4442.10.

Initial conclusion

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 Lower which is not 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 goes Up the other goes Down. All of Asia traded Mixed. All of Europe is trading Mixed as well.

Possible challenges to traders

Small Business Index is out at 6 AM EST. Major.
Consumer Credit is out at 3 PM EST. Major.

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 nosed dived at around 8:30 AM EST as the August job numbers were reported. The Dow gained ground at around the same time. Look at the charts below and you'll see a pattern for both assets. The ZT lost ground 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 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

Last Friday we gave the markets a Neutral or Mixed bias as it was a Jobs Friday. The Dow dropped 272 points, and the other indices lost ground as well. Today our bias is Neutral or Mixed as well.

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

Commentary

Last Friday the markets lost ground as the US economy gained 162,000 jobs and at glance this is positive. However it also led to the fear that the Federal Reserve may keep interest rates pat when they meet on September 16th. The markets do not want Higher interst rates (and neither do I for that matter). The Dow dropped 272 points and the other indices closed Lower as well. Will this continue?

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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