Markets veer to the downside

USD: Sep '26 is Up at 100.640.  

Energies: Sep '26 Crude is Up at 79.77.

Financials: The Sep '26 30 Year T-Bond is Higher by 17 ticks and trading at 111.17.

Indices: The Jun '26 S&P 500 emini ES contract is 232 ticks Lower and trading at 7519.00

Gold: The Aug'26 Gold contract is trading Up at 3998.20.

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 Lower and Crude is trading Higher which is correlated. Gold is trading Higher which is not 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 while all of Europe is trading Lower with the exception of the Milan exchange.  

Possible challenges to traders                                                                                           

• Building Permits is out at 8:30 AM EST.  Major.
• Housing Starts is out at 8:30 AM EST.    Major.
• Import Prices m/m is out at 8:30 AM EST.   Major.
• Capacity Utilization Rate out at 9:15 AM EST.   Major.
• Industrial Production out at 9:15 AM EST.   Major.
• Prelim UOM Consumer Sentiment is out at 10 AM EST.   Major
• Prelim UOM Inflation Expectations is out at 10 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 climbed Higher at around 8:30 AM EST with no news items pending.   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 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 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

Yesterday we gave the markets a Neutral bias but the markets veered Higher.  Today our bias is to the Downside.

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

Commentary

Yesterday, the markets gained momentum with a mini news tsunami.