Markets make a U turn

USD: Jun '25 is Down at 98.990.  

Energies: Jul '25 Crude is Up at 65.89.

Financials: The Sep '25 30 Year T-Bond is Lower by 14 ticks and trading at 112.04.

Indices: The Jun '25 S&P 500 emini ES contract is 46 ticks Lower and trading at 6033.50.

Gold: The Aug'25 Gold contract is trading Up at 3351.20.

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 Higher which is 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 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 Mixed.  Europe is trading Mixed as well.

Possible challenges to traders

• Core CPI m/m is out at 8:30 AM EST.  This is Major.
• CPI m/m is out at 8:30 AM EST.  This is Major.
• CPI y/y is out at 8:30 AM EST.  This is Major.
• Crude Oil Inventories is out at 10:30 AM EST.  This is Major.
• 10 Year Bond Auction Starts at 1 PM EST.  This is Major.
• Federal Budget Balance is out at 2 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 slide Lower at around 8:50 AM EST with no economic news 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 moved Higher at 8:50 AM EST and the ZT slide 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 still Jun '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 - 6/10/25

Dow - Jun 2025- 6/10/25

Bias

Yesterday we gave the markets a Downside bias as crude, the USD and Gold were Higher.  The markets however had other ideas and traded Higher on the day.  The Dow closed Higher by 93 points and the other indices traded Higher as well.  Today we aren't dealing with a correlated market, and our bias is to the Downside.

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

Commentary

The markets were poised to go Lower yesterday and initially it did go Lower.  However, at some point during the afternoon the markets made an about face and traded Higher.  Possibly this was because President Trump was scheduled to speak at 4 PM EST.  This didn't change anything as the markets still closed Higher on the session.