The return of the news tsunami

Nick Mastrandrea Market Tea Leaves

USD: Sep '26 is Down at 100.945.

Energies: Oct '26 Crude is Up at 90.52.

Financials: The Dec '26 30 Year T-Bond is Higher by 14 ticks and trading at 103.22.

Indices: The Sep '26 S&P 500 emini ES contract is 20 ticks Higher and trading at 7737.00.

Gold: The Dec'26 Gold contract is trading Up at 4221.80.

Initial conclusion

This is not a correlated market. The USD is Down and Crude is Up which is normal, but 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 Higher and Crude is trading Higher which is not correlated. Gold is trading Up 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. All of Asia traded Lower except the Shanghai exchange. All of Europe is trading Mixed.

Possible challenges to traders

ADP Non-Farm Employment Change is out at 8:15 AM EST. Major.
Core PCE Price Index m/m is out at 9 AM EST. Major.
Final GDP q/q is out at 8:30 AM EST. Major.
Final GDP Price Index q/q is out at 8:30 AM EST. Major.
Goods Trade Balance is out at 8:30 AM EST. Major.
Personal Income m/m is out at 8:30 AM EST. Major.
Personal Spending is out at 8:30 AM EST. Major.
Prelim Wholesale Inventories m/m is out at 8:30 AM EST. Major.
Chicago PMI is out at 9:45 AM EST. Major.
Crude Oil Inventories is out at 10:30 AM EST. Major.
FOMC Member Barkin Speaks at 1:30 PM EST. Major.
FOMC Member Cook Speaks at 3:25 PM EST. Major.

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 traded Lower at around 8:30 AM EST with no news items 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 8:30 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 about a dozen ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for the ZT is now Dec '26. I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of BarCharts

Bias

Yesterday the markets took a turn to the Downside as the Dow dropped 132 points 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

Today we see the return of the news tsunami and we haven't seen one in awhile, but then again today is the last trading day for September so we have to take that into consideration.

Author

Nick Mastrandrea

Market Tea Leaves

Nick Mastrandrea over 20 years experience in trading and formerly held a NASD Series 7. He currently holds a NJ Life, Health and Variable Authority. Nick is a published writer and his work has appeared in Futures Magazine, TraderPlanet and others.

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