News tsunami cometh

USD: Jun '25 is Down at 100.615.  

Energies: Jun '25 Crude is Down at 60.43.

Financials: The Jun '25 30 Year T-Bond is Higher by 5 ticks and trading at 112.17.

Indices: The Jun '25 S&P 500 emini ES contract is 120 ticks Lower and trading at 5878.50.

Gold: The Jun'25 Gold contract is trading Down at 3179.50.

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Down which is not normal, but 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 Lower which is not correlated. Gold is trading Lower which is not 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 Higher with the exception of the Nikkei and Singapore exchanges which are Lower.  All of Europe is trading Lower except the London and Ibex exchanges which are Lower.

Possible challenges to traders

• Core PPI m/m is out at 8:30 AM EST. This is Major.
• Core Retail Sales m/m is out at 8:30 AM EST.  This is Major.
• PPI m/m is out at 8:30 AM EST.  This is Major.
• Unemployment Claims is out at 8:30 AM EST.  This is Major.
• Empire State Mfg. Index is out at 8:30 AM EST.  This is Major.
• Philly Fed Mfg. Index is out at 8:30 AM EST.  This is Major.
• Fed Chair Powell Speaks at 8:40 AM EST.  This is Major.
• Capacity Utilization Rate is out at 9:15 AM EST.  Major.
• Industrial Production is out at 9:15 AM EST.       Major.
• Business Inventories m/m is out at 10 AM EST.   Major.
• NAHB Index is out at 10 AM EST.  This is Major.
• Natural Gas Storage is out at 10:30 AM EST.  This is Major.
• FOMC Member Barr Speaks at 2:05 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 dived Lower at around 7 AM EST with no economic news pending.  The Dow rose Higher at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Higher at 7 AM EST and the ZT moved 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 a dozen plus ticks per contract on this trade.   Each tick is worth $6.25.  Please note: the front month for ZT is now Jun '25 and the Dow is Jun '25 as well.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of barcharts

ZT -Jun 2025 - 5/14/25

Dow - Jun 2025- 5/14/25

Bias

Yesterday we gave the markets an Upside bias and the markets didn't disappoint.  The Dow rose by only 19 and the other indices had fractionally gains as well.  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

Yesterday the talk was Trump's visit to the Middle East and his acceptance of a 400 million Dollar jet from a foreign nation.