Tariff delays propels markets

USD: Jun '25 is Up at 99.550.  

Energies: Jul '25 Crude is Up at 61.46.

Financials: The Jun '25 30 Year T-Bond is Lower by 16 ticks and trading at 112.13.

Indices: The Jun '25 S&P 500 emini ES contract is 320 ticks Higher and trading at 5897.00.

Gold: The Jun'25 Gold contract is trading Up at 3309.50.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Up which is not normal, and the 30 Year T-Bond is trading Lower.  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 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 traded Lower with the exception of the Singapore exchange.  All of Europe is trading Lower except the Milan exchange.

Possible challenges to traders

• Richmond Manufacturing Index is out at 10 AM EST. This is Major.

• FOMC Meeting Minutes is out at 2 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 climbed Higher at around 8:30 AM EST after the Durable Goods numbers were released. 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 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 Long 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 - 5/27/25

Dow - Jun 2025- 5/27/25

Bias

Yesterday we gave the markets an Upside bias as Gold and Crude were trading Lower Tuesday morning, and this usually signifies an Upside Day.  The markets didn't disappoint as the Dow leapt by 741 points, and the other indices closed Higher 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

Over the weekend President Trump decided to extend the start date for EU tariffs to the early July timeframe.  This helped to propel the markets Higher.  Will this continue?  Only time will tell.  Want to learn Market Correlation and determine market direction hours before the Opening Bell?