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 Lower, and Crude is trading Higher which is 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. Asia is trading Higher with the exception of the Hang Seng and Sensex exchanges. All of Europe is trading Higher with the exception of the London exchange.

Possible challenges to traders

ADP Non-Farm Employment Change is out at 8:15 AM EST. This is Major.
Final Manufacturing PMI is out at 9:45 AM EST. This is Major.
ISM Manufacturing PMI is out at 10 AM EST. This is Major.
JOLTS Job Openings is out at 10 AM EST. This is Major.
ISM Manufacturing Prices is out at 10 AM EST. This is Major.
Construction Spending m/m is out at 10 AM EST. This is Major.
Wards Total Vehicle Sales - All Day by Brand. This is Major.
Crude Oil Inventories I s out at 10:30 AM EST. This is Major.
Federal Funds Rate is out at 2 PM EST. This is Major.
FOMC Statement is out at 2 PM EST. This is Major.
FOMC Press Conference starts at 2:30 PM EST. This is Major.

Treasuries

Traders, please note that we've changed the Bond instrument from the 30 year (ZB) to the 10 year (ZN). They work exactly the same.

We've elected to switch gears a bit and show correlation between the 10-year bond (ZN) and the S&P futures contract. The S&P contract is the Standard and Poor's, 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 ZN migrated Lower at around 8:30 AM EST as the S&P hit a Low at around the same time. If you look at the charts below the S&P gave a signal at around 8:30 AM and the ZN started its Downward trend. Look at the charts below and you'll see a pattern for both assets. S&P hit a Low at around 8:30 AM and migrated Higher. These charts represent the newest version of MultiCharts and I've changed the timeframe to a 15-minute chart to display better. This represented a Shorting opportunity on the 10-year note, as a trader you could have netted about 20 ticks per contract on this trade. Each tick is worth $15.625. Please note: the front month for the ZN is now Dec '23. The S&P contract is now Dec' 23. I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of MultiCharts built on an AMP platform

ZN - Dec 2023 - 10/31/23

S&P - Dec 2023 - 10/31/23

Bias

Yesterday we gave the markets a Neutral bias as we saw no evidence of Market Correlation yesterday morning. The markets migrated Higher as the Dow closed 124 points Higher, and the other indices veered to the Upside as well. Given that today is FOMC Day, our bias will remain Neutral as the markets have never shown any sense of normalcy on this day.

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

Commentary

So, it appears as though the markets maintained their Upside stance as all indices closed Higher yesterday. Today is FOMC Day and we will finally learn if the Federal Reserve will hike rates or leave things as is. I hope that at the very least they leave things as is because we are about to enter the Holiday spending season and increasing rates won't bolster spending. It may shrink it. Besides being the holiday spending season, there will be a pent-up demand for autos as all three car manufacturers were on strike since September 15th and those autos will need to be financed. Additionally, mortgage rates are way too high and raising rates will only make it more difficult to purchase a home. Will the Fed listen? We'll find out at 2 PM EST.

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD climbs to daily highs near 1.1820

EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold flirts with four-week highs past $5,200

Gold extends its rebound, climbing for a third consecutive session and pushing back above the $5,200 mark per troy ounce on Friday. The move higher continues to draw support from lingering geopolitical tensions and the ongoing uncertainty surrounding US trade policy, both of which are keeping safe-haven demand firmly in play.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.

Breaking: US and Israel attack Iran, risk aversion to sweep global markets

Early Saturday, United States (US) President Donald Trump announced that the US had begun “major combat operations” in Iran, following Israel’s pre-emptive missile attacks against Tehran.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.