Lack of rate reductions drives markets lower

USD: Mar '26 is Up at 96.255.  

Energies: Mar '26 Crude is Down at 65.02.

Financials: The Mar '26 30 Year T-Bond is Lower by 15 ticks and trading at 114.24.

Indices: The Mar '26 S&P 500 emini ES contract is 81 ticks Lower and trading at 6972.50

Gold: The Feb'26 Gold contract is trading Down at 5167.80.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is 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 Lower 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. Asia traded Higher except the Aussie Dow.  Currently all of Europe is trading Higher.

Possible challenges to traders                                                  

• Core PPI is out at 8:30 AM EST. This is Major.
• PPI is out at 8:30 AM EST. This is Major.
• Chicago PMI is out at 9:45 AM EST. This is Major.
• FOMC Member Musalem Speaks at 12:45 PM 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.

Yesterday the ZT climbed Higher at around 8:30 AM EST with no real economic reports.   The Dow dived Lower at around the same time.  Look at the charts below and you'll see a pattern for both assets. The ZT climbed Higher at around 8:30 AM EST and the Dow 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 Long opportunity on the 2-year note, as a trader you could have netted 20 plus ticks per contract on this trade.  Each tick is worth $6.25.  Please note: the front month for the ZT and YM are both Mar '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

Yesterday we gave the markets an Upside bias as it was correlated that way in the early AM. The markets however had other ideas as the S&P and Nasdaq both closed Lower.  Today we aren't dealing with a correlated market, and our bias is Neutral or Mixed.

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

Commentary

We are dealing with a very Mixed market that can change at a moment's notice. Between the tariffs, inflation and now it appears that companies are starting to lay off workers; the American people need a break but unfortunately, they aren't getting it. This has served to take the winds out of a trader's sail.