This is not a correlated market. The USD is Up and Crude is Down 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 Lower 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. All of Asia is trading Mixed. Europe is trading Mixed as well.

Possible challenges to traders

Unemployment Claims are out at 8:30 AM EST. This is Major.
Philly Fed Manufacturing Index is out at 8:30 AM EST. This is Major.
Import Prices m/m is out at 8:30 AM EST. This is Major.
Industrial Production m/m is out at 9:15 AM EST. This is Major.
Capacity Utilization Rate is out at 9:15 AM EST. This is Major.
FOMC Member Williams Speaks at 9:25 AM EST. This is Major.
NAHB Housing Market Index is out at 10 AM EST. This is Major.
FOMC Member Waller Speaks at 10:30 AM. This is Major.
Natural Gas Storage is out at 10:30 AM EST. This is Major.
FOMC Member Barr Speaks at 10:35 AM EST. This is Major.

Treasuries

Traders, please note that we've changed the Bond instrument from the 30 year (ZB) to the 10 year (ZN). They work exactly the same.

We've elected to switch gears a bit and show correlation between the 10-year bond (ZN) and the S&P futures contract. The S&P contract is the Standard and Poor's, 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. Today we aren't dealing with a correlated market and our bias is to the Upside.

Yesterday the ZN migrated Higher at around 8:30 AM EST as the S&P hit a Low at around the same time. If you look at the charts below the S&P gave a signal at around 8:30 AM and the ZN started its Downward trend. Look at the charts below and you'll see a pattern for both assets. S&P hit a Low at around 8:30 AM and migrated Higher. These charts represent the newest version of MultiCharts and I've changed the timeframe to a 15-minute chart to display better. This represented a Short opportunity on the 10-year note, as a trader you could have netted about 30 ticks per contract on this trade. Each tick is worth $15.625. Please note: the front month for the ZN is now Dec '23. The S&P contract is now Dec' 23. I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of MultiCharts built on an AMP platform

ZN - Dec 2023 - 11/15/23

S&P - Dec 2023 - 11/15/23

Bias

Yesterday we gave the markets an Upside bias as both the Bonds and Crude were trading Lower and that usually reflects an Upside Day. The indices didn't disappoint as the Dow closed Higher by 164 points and the other indices closed Higher 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 the PPI data was released at 8:30 AM EST and it seems that supplier prices didn't rise much in October as well, in fact it was reported that yesterday report showed the lowest increase since March, 2020 before the pandemic took off. The Federal Reserve will also take these numbers into consideration next month when they decide if whether or not to hike interest rates. Personally I can't see how they can justify a rate increase when both Consumer and Producer prices haven't increased much but as in all things only time will tell...

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.