Markets make a U-turn

USD: Sep '26 is Up at 100.905.  

Energies: Aug '26 Crude is Up at 74.27.

Financials: The Sep '26 30 Year T-Bond is Lower by 17 ticks and trading at 111.04.

Indices: The Jun '26 S&P 500 emini ES contract is 260 ticks Lower and trading at 7485.25

Gold: The Aug'26 Gold contract is trading Down at 4061.30.

Initial conclusion

This is not a correlated market. The USD is Up and Crude is Up which is not 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 Higher 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 Lower.  

Possible challenges to traders                                                  

• Current Account is out at 8:30 AM EST. Major.
• New Home Sales is out at 10 AM EST. Major.          
• Crude Oil Inventories is out at 10:30 AM EST. 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 dived Lower at around 8:35 AM EST with no real news items to report.   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 8:35 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 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

ZT -Sep 26 - 7/07/26

Dow - Jun 2026- 7/07/26

Bias

Yesterday we gave the markets a Mixed or Neutral bias, the markets veered Lower with the Dow dropping over 200 points and the other indices lost ground as well. Asia closed Mixed but Europe is all down.  Today our bias is to the Downside.

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

Commentary

Yesterday we gave the markets a Neutral or Mixed bias but it behooves us to remember what that means.  It means the markets could go anywhere at any time during the trading session.  The only thing that matters is where it closes when the closing bell rings.   Want to learn Market Correlation and determine market direction hours before the Opening Bell?