The day after

USD: Sept '25 is Down at 98.170.  

Energies: Aug '25 Crude is Up at 73.77.

Financials: The Sep '25 30 Year T-Bond is Lower by 7 ticks and trading at 113.13.

Indices: The Jun '25 S&P 500 emini ES contract is 45 ticks Lower and trading at 6023.00.

Gold: The Aug'25 Gold contract is trading Down at 3372.50.

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 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 Lower and Crude is trading Higher which is 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. All of Asia traded mainly Lower.  All of Europe is trading Lower as well.

Possible challenges to traders

• Philly Fed Manufacturing Index is out at 8:30 AM EST.  This is Major.
• CB Leading Index m/m is out at 10 AM EST.  This is Major.
• Fed Monetary Policy Report - tentative.  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.

On Wednesday the ZT climbed Higher at around 8 AM EST with no 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 dived Lower at 8 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 about a dozen plus ticks per contract on this trade.   Each tick is worth $6.25.  Please note: the front month for ZT is now Sep '25 and the Dow is still Jun '25.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of barcharts

ZT -Sep 25 - 6/18/25

Dow - Jun 2025- 6/18/25

Bias

Last Wednesday we gave the markets a Neutral bias as it was FOMC Day and we always maintain a Neutral bias on that day.  The Dow dropped 44 points on the session, the S&P lost 2 but the Nasdaq gained 25.  All-in-all a Neutral or Mixed day as suggested.  Today we aren't dealing with a correlated market and will maintain a Neutral bias.

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

Commentary

Oh well as suggested we didn't think the Fed would lower at this juncture as the Trump tariffs haven't played out yet and we don't know the full impact on prices as of yet.  The Fed did leave the door open for future and most analysts think the Fed will Lower by one full percentage point.