This is not a correlated market. The USD is Down and Crude is Up which is 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 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 Higher except the Sensex and Shanghai exchanges. Currently all of Europe is trading Higher except the German Dax.

Possible challenges to traders

Core PPI 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.
Core Retail Sales is out at 8:30 AM EST. This is Major.
Retail Sales is out at 8:30 AM EST. This is Major.
Current Account is out at 8:30 AM EST. This is Major.
FOMC Member Paulson Speaks at 9:50 AM EST. This is Major.
Business Inventories is out at 10 AM EST. This is Major.
Existing Home Sales is out at 10 AM EST. This is Major.
FOMC Member Miran Speaks at 10 AM EST. This is Major.
Crude Oil Inventories is out at 10:30 AM EST. This is Major.
FOMC Member Bostic Speaks at 12 noon. This is Major.
FOMC Member Kashkari Speaks at 12 noon. This is Major.
Beige Book is out at 2 PM EST. This is Major.
FOMC Member Williams Speaks at 2:10 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 8:30 AM EST with the all-important CPI data released at that time. 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 8:30 AM EST and the Dow 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 30 ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for the ZT and YM are both Mar '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 -Mar 26 - 1/13/26

Dow - Mar 2026- 1/13/26

Bias

Yesterday we gave the markets a Downside bias, and the markets didn't disappoint. The Dow closed Lower by 398 points and the other indices closed Lower 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

Yesterday we made a call for the markets to go down and did so hours before the markets opened. As suggested the markets did go down. Today we have about 15 major economic news and this could drive the markets in any direction today. Want to learn Market Correlation and determine market direction hours before the Opening Bell?

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD tests nine-day EMA support near 1.1850

EUR/USD remains in the negative territory for the fourth successive session, trading around 1.1870 during the Asian hours on Friday. The 14-day Relative Strength Index momentum indicator at 56 stays above the midline, confirming steady momentum. RSI has eased but remains above 50, indicating momentum remains constructive for the bulls.

GBP/USD consolidates around 1.3600 vs. USD; looks to US CPI for fresh impetus

The GBP/USD pair remains on the defensive through the Asian session on Friday, though it lacks bearish conviction and holds above the 1.3600 mark as traders await the release of the US consumer inflation figures before placing directional bets.

Gold recovers swiftly from weekly low, climbs back closer to $5,000 ahead of US CPI

Gold regains positive traction during the Asian session on Friday and recovers a part of the previous day's heavy losses to the $4,878-4,877 region, or the weekly low. The commodity has now moved back closer to the $5,000 psychological mark as traders keenly await the release of the US consumer inflation figures for more cues about the Federal Reserve's policy path.