This is a nearly 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 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 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 Higher. Currently Europe is trading Mixed.

Possible challenges to traders

Flash MFG. PMI is out at 9:45 AM EST. This is Major.
Flash Services PMI is out at 9:45 AM EST. This is Major.
Revised UOM Consumer Sentiment out at 10 AM EST. This is not Major.
Revised UOM Inflation Expectations is out at 10 AM EST. This is not Major.
CB Leading Index m/m is 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.

Yesterday the ZT dived Lower at around 8:15 AM EST waiting for various economic reports. 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 8:15 AM EST and the Dow 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 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 the ZT and YM are both Mar '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 -Mar 26 - 1/22/26

Dow - Mar 2026- 1/22/26

Bias

Yesterday we gave the markets an Upside bias as the markets were correlated that way and the indices didn't disappoint as the Dow climbed Higher by 281 points and the other indices gained ground as well. Today we're dealing with a nearly correlated market, and our bias is to the Downside.

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

Commentary

Apparently yesterday President Trump negotiated a deal for Greenland without owning the island outright. It seems the Danish kingdom will allow the United States to build military bases there and have rare earth mining capability. Want to learn Market Correlation and determine market direction hours before the Opening Bell?

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD looks mildly offered below 1.1750

EUR/USD comes under some mild selling pressure on Friday, partially fading Thursday’s strong pullback and revisiting the 1.1740 region on the back of a humble recovery in the US Dollar. Later in the day, investors’ attention will be on the release of US flash PMIs for the month of January.

GBP/USD flirts with two-week tops around 1.3530

GBP/USD extends its weekly firm performance and challenges the area of two-week peaks around 1.3530 on the back of a tepid bounce in the Greenback. Positive results from UK Retail Sales and preliminary PMIs appear to reinforce Cable's solid gains so far on Friday.

Gold shifts its focus to $5,000

Gold prices hit a record high near $4,970 per troy ounce earlier on Friday, leaving the door wide open to a potential test of the key $5,000 barrier. The Greenback’s inconclusive price action and shrinking US Treasury yields across the curve add to the yellow metal’s rally so far on Friday.

Bitcoin, Ethereum, and XRP face elevated downside risk amid weak technical setups

Bitcoin is struggling to stay above support at $89,000 at the time of writing, as headwinds intensify across the cryptocurrency market on Friday. Ethereum and Ripple are facing low retail and institutional demand, while bearish indicators continue to flash subtle signals that losses may extend further.

Week ahead – Fed and BoC meet amid geopolitical upheaval and Trump’s Fed pick

Fed to likely go on pause after three straight cuts. BoC is also expected to stand pat. But will Trump steal the limelight by revealing his Fed chair nomination?

Tron Price Analysis: TRX extends gains as bullish breakout structure remains intact

Tron (TRX) price extends its gains, trading above $0.30 at the time of writing on Friday after retesting the previously broken bullish breakout structure earlier this week. The positive on-chain and derivatives data back the bullish price action.