Jobs Friday

US Dollar: Jun '23 USD is Up at 101.055.

Energies: May '23 Crude is Up at 70.34.

Financials: The Jun '23 30 Year T-Bond is Up 25 ticks and trading at 131.11.

Indices: The Jun '23 S&P 500 Emini ES contract is 95 ticks Higher and trading at 4099.50. 

Gold: The Jun'23 Gold contract is trading Down at 2045.20. Gold is 101 ticks Lower than its close.

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 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. At the present time Asia is trading Mixed. Conversely all of Europe is trading Higher.

Possible challenges to traders today

• Average Hourly Earnings m/m is out at 8:30 AM EST. This is Major.

• Non-Farm Employment Change is out at 8:30 AM EST. This is Major

• Unemployment Rate is out at 8:30 AM EST. This is Major.

• FOMC Member Cook Speaks at 1 PM EST. This is Major.

• Consumer Credit m/m is out at 3 PM EST. This is Major.

• FOMC Financial Stability Report - tentative. This is Major.

Treasuries

Traders, please note that we've changed the Bond instrument from the 30 year (ZB) to the 10 year (ZN).  They work exactly the same.  

We've elected to switch gears a bit and show correlation between the 10-year bond (ZN) and the S&P futures contract. The S&P contract is the Standard and Poor's, 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 ZN migrated Higher at around 9 AM EST but at the same time the S&P hit a High. If you look at the charts below the ZN gave a signal at around 9 AM and the ZN continued its Upward trend.  Look at the charts below and you'll see a pattern for both assets. S&P hit a High at around 9 AM and migrated Lower. These charts represent the newest version of MultiCharts and I've changed the timeframe to a 15-minute chart to display better. This represented a Long opportunity on the 10-year note, as a trader you could have netted about 60 ticks per contract on this trade. Each tick is worth $15.625.  Please note: the front month for the ZN is now Jun '23.  The S&P contract is also Jun' 23. I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.  

Charts courtesy of MultiCharts built on an AMP platform

ZN - Jun 2023 - 5/04/23

S&P - Jun 2023 - 5/04/23

Bias

Yesterday we gave the markets a Neutral bias as we didn't see any evidence of market correlation whatsoever. The indices drifted Downward with the Dow dropping 287 points and the other indices closing Lower as well. Given that today is Jobs Friday, we will maintain a Neutral bias which means the markets could go anywhere today based upon what is reported. 

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

Commentary

I appeared as though the markets weren't done with a negative bias from Wednesday's FOMC Meeting as the Dow dropped 287 points and the other indices lost ground as well. Today is Jobs Friday or Non-Farm Payrolls as it's called officially. Today we will maintain a Neutral or Mixed bias as we do every Jobs Friday. Why? Because the markets (liken to FOMC Day) have never shown any sense of normalcy on that day.