News tsunami gives a mixed market

USD: Jun '25 is Down at 100.650.  

Energies: Jun '25 Crude is Up at 61.33.

Financials: The Jun '25 30 Year T-Bond is Higher by 26 ticks and trading at 113.28.

Indices: The Jun '25 S&P 500 emini ES contract is 85 ticks Higher and trading at 5954.50.

Gold: The Jun'25 Gold contract is trading Down at 3172.20.

 Initial conclusion

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 Higher and Crude is trading Higher 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 Lower with the exception of the Sensex and Singapore exchanges which are Lower.  All of Europe is trading Higher.

Possible challenges to traders

• Building Permits is out at 8:30 AM EST. This is Major.
• Housing Starts are out at 8:30 AM EST.  This is Major.
• Import Prices m/m is out at 8:30 AM EST.  This is Major.
• FOMC Member Barkin Speaks Tentative.  This is Major.
• Preliminary UOM Consumer Sentiment is out at 10 AM EST.  This is Major.
• Preliminary Inflation Expectation is out at 10 AM 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 climbed Higher at around 8:30 AM EST with an avalanche of news pending.  The Dow dived Lower at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 8:30 AM EST and the ZT moved 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 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 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 - 5/15/25

Dow - Jun 2025- 5/15/25

Bias

Yesterday we gave the markets a Neutral or Mixed bias.  The indices closed Mixed as suggested.  The Dow was Higher by 272 points, the S&P by 24 with only the Nasdaq closing Lower by 34 points.  Today we aren't dealing with a correlated market, and our bias is to the Upside.

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

Commentary

Yesterday we had more economic news reported than I think I've ever seen but the good news is it didn't route the markets Lower. Today should be tame by comparison.