The markets lash back

USD: Sep '26 is Down at 100.975.  

Energies: Aug '26 Crude is Up at 80.81.

Financials: The Sep '26 30 Year T-Bond is Lower by 2 ticks and trading at 110.21.

Indices: The Jun '26 S&P 500 emini ES contract is 60 ticks Lower and trading at 4548.00

Gold: The Aug'26 Gold contract is trading Up at 4025.20.

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 Higher which is 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 Mixed while all of Europe is trading Lower.  

Possible challenges to traders                                                  

• ADP Weekly Employment Change is out at 8:15 AM EST.  Major.
• Core CPI m/m is out at 8:30 AM EST. Major.
• CORE CPI y/y is out at 8:30 AM EST.   Major.
• CPI m/m is out at 8:30 AM EST. Major.
• CPI y/y is out at 8:30 AM EST.       Major.
• Fed Chairman Warsh Testifies at 10 AM EST.  Major.
• FOMC Member Barr Speaks at 12:40 PM EST.  Major.
• FOMC Member Goolsbee Speaks at 1 PM EST.  Major.
• FOMC Member Bowman Speaks at 2:55 PM EST. 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 dived Lower at around 8 AM EST with no real news pending.   The Dow climbed Higher at around the same time.  Look at the charts below and you'll see a pattern for both assets. The ZT dived Lower at around 8 AM EST and the Dow climbed Higher 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 Short 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 the ZT is now Sep '26.  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 26 - 7/13/26

Dow - Jun 2026- 7/13/26

Bias

Yesterday we gave the markets a Neutral bias, but the markets veered to the Downside.  The Dow dropped 170 points on the session, and the other indices lost ground as well.  Today our bias is Mixed or Neutral.

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

Commentary

Yesterday the markets dropped momentum which is surprising as the president has announced that the US will retake the Hormuz Strait.  Want to learn Market Correlation and determine market direction hours before the Opening Bell?