The markets make a U-turn

USD: Dec '25 is Up at 98.805.  

Energies: Dec '25 Crude is Up at 61.91.

Financials: The Dec '25 30 Year T-Bond is Lower by 10 ticks and trading at 118.17.

Indices: The Dec '25 S&P 500 emini ES contract is 76 ticks Higher and trading at 6794.00.

Gold: The Dec'25 Gold contract is trading Down at 4072.20.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Up which is not normal, but 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 Lower which is 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. Overnight Asia traded Mixed.  Currently all of Europe is trading Lower.

Possible challenges to traders                                                

• Core CPI m/m 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.
• Flash Manufacturing PMI is out at 9:45 AM EST. Major.
• Flash Services PMI is out at 9:45 AM EST. Major.
• Revised UOM Consumer Sentiment is out at 10 AM. Not Major.
• Revised UOM Inflation Expectation is out at 10 AM EST. Not 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 7:30 AM EST with no other economic news in sight. The Dow climbed Higher at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow climbed Higher at around 7:30 AM EST and the ZT dived Lower 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 Short 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 Dec '25 and the Dow is now Dec '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 -Dec 25 - 10/23/25

Dow - Dec 2025- 10/23/25

Bias

Yesterday we gave the markets a Downside bias however the markets had other ideas. The Dow gained 144 points on the session and the other indices traded Higher as well. Today we aren't dealing with a correlated market and our bias is to the Upside.

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

Commentary

When we viewed the markets in the early AM it was correlated to the Downside and initially the markets opened Lower. This changed to the Upside by the afternoon, and the markets closed Higher by the end of the session.