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 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 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 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 is Higher except the Nikkei and Sensex exchanges. Europe is Higher except the Milan and Spanish exchanges.

Possible challenges to traders

Federal Budget Balance is out at 2 PM EST. This is Major.
Lack of major economic news.

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 AM EST with Unemployment Claims pending. The Dow leapt Higher at the same time. Look at the charts below and you'll see a pattern for both assets. The Dow dived Lower at 8:30 AM EST and the ZT climbed Higher 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 20 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 now Sep '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 - 7/10/25

Dow - Sep 2025- 7/10/25

Bias

Yesterday we gave the markets a Neutral or Mixed bias and the markets didn't disappoint. The Dow and S&P closed Higher while the Nasdaq dived Lower. 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

Yesterday the markets were Mixed in the early AM hence the Neutral or Mixed bias. The markets closed Mixed with the Dow and S&P Higher but the Nasdaq Lower. Want to learn Market Correlation and determine market direction hours before the Opening Bell?

Author

Nick Mastrandrea

Market Tea Leaves

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Editor's Picks

EUR/USD could test 1.1750 amid strengthening bullish bias

EUR/USD remains flat after two days of small losses, trading around 1.1740 during the Asian hours on Thursday. On the daily chart, technical analysis indicates a strengthening of a bullish bias, as the pair continues to trade within an ascending channel pattern.

GBP/USD consolidates above mid-1.3300s as traders await BoE and US CPI report

The GBP/USD pair struggles to capitalize on the overnight bounce from the 1.3310 area, or a one-week low, and oscillates in a narrow band during the Asian session on Thursday. Spot prices currently trade around the 1.3370 region, down less than 0.10% for the day, as traders opt to wait on the sidelines ahead of the key central bank event risk and US consumer inflation data.

Gold awaits weekly trading range breakout ahead of US CPI report

Gold struggles to capitalize on the previous day's move higher back closer to the $4,350 level and trades with a mild negative bias during the Asian session on Thursday. The downtick could be attributed to some profit-taking amid a US Dollar uptick, though it is likely to remain cushioned on the back of a supportive fundamental backdrop.

Dogecoin breaks key support amid declining investor confidence

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Monetary policy: Three central banks, three decisions, the same caution

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Dogecoin Price Forecast: DOGE breaks key support amid declining investor confidence

Dogecoin (DOGE) trades in the red on Thursday, following a 4% decline on the previous day. The DOGE supply in profit declines as large wallet investors trim their portfolios. Derivatives data shows a surge in bearish positions amid declining retail interest.

Initial conclusion