No cuts, no increase

Nick Mastrandrea Market Tea Leaves

USD: Dec '26 is down at 101.060.

Energies: Dec '26 Crude is up at 101.43.

Financials: The Dec '26 30 Year T-Bond is Higher by 16 ticks and trading at 107.08.

Indices: The Sep '26 S&P 500 E-mini ES contract is 60 ticks Lower and trading at 7768.00.

Gold: The Dec'26 Gold contract is trading down at 4037.50.

Initial conclusion

This is not a correlated market. The USD is down, and Crude is Up which is 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 down, 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 goes Up the other goes down. Asia traded mainly Higher. Europe is trading Mixed.

Possible challenges to traders

Advance GDP q/q is out at 8:30 AM EST. Major.
Unemployment Claims is out at 8:30 AM EST. Major.
Personal Income is out at 8:30 AM EST. Major.
Personal Spending is out at 8:30 AM EST. Major.
Natural Gas Storage is out at 10:30 AM EST. Major.

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 two year dived climbed Higher at around 8 AM EST with no major news 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 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 about a dozen ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for the ZT is now Dec '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 suggested a mixed or Neutral day, but the markets but the markets veered to he Upside. The Dow gained 98 points and the other indices gained ground as well. Today our bias is to the Downside.

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

Commentary

Yesterday we suggested a Mixed day but the markets had other ideas and gained ground. Of course it didn't hurt that the Fed didn't raise rates.

Author

Nick Mastrandrea

Market Tea Leaves

Nick Mastrandrea over 20 years experience in trading and formerly held a NASD Series 7. He currently holds a NJ Life, Health and Variable Authority. Nick is a published writer and his work has appeared in Futures Magazine, TraderPlanet and others.

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