Two out of three ain't bad

USD: Sept '25 is Up at 98.180.  

Energies: Oct '25 Crude is Down at 62.96.

Financials: The Dec '25 30 Year T-Bond is Higher by 8 ticks and trading at 114.26.

Indices: The Sep '25 S&P 500 emini ES contract is 48 ticks Higher and trading at 6469.25.

Gold: The Dec'25 Gold contract is trading Down at 3599.40.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Down which is normal, and 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 Lower 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 traded Mixed.  Europe is trading Higher with the exception of the Paris exchange.

Possible challenges to traders

• Challenger Job Cuts y/y is out at 7:30 AM EST.  This is Major.
• ADP Non-Farm Employment Change is out at 8:15 AM EST.  This is Major.
• Unemployment Claims is out at 8:30 AM EST.  This is Major.
• Revised Nonfarm Productivity q/q is out at 8:30 AM EST.  This is not Major.
• Revised Unit Labor Costs q/q is out at 8:30 AM EST.  This is not Major.
• Trade Balance is out at 8:30 AM EST.  This is Major.
• Final Services PMI is out at 9:45 AM EST.  This is Major.
• ISM Services PMI is out at 10 AM EST.  This is Major.
• Natural Gas Storage is out at 10:30 AM EST.  This is Major.
• Crude Oil Inventories is out at 12 Noon EST.  This is Major.
• FOMC Member Williams Speaks at 12:05 PM EST.  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 climbed Higher at around 7:30 AM EST with various news items pending.  The Dow dived Lower at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow dived Lower at around 7:30 AM EST and the ZT 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 Long opportunity on the 2-year note, as a trader you could have netted about 10 ticks per contract on this trade.   Each tick is worth $6.25.  Please note: the front month for ZT is now Sep '25 and the Dow is now Sep '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 -Sep 25 - 9/03/25

Dow - Sep 2025- 9/03/25

Bias

Yesterday we predicted an Upside Day for the markets, however two of the three indices we track traded Higher with the Dow trading 72 points Lower.  The other indices closed Higher.  Today our bias is to the Upside.

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

Commentary

Yesterday was a topsy turvy day for the markets as the Epstein "survivors" spent quite a bit of time discussing their ordeal and of course certain high-ranking members of government didn't like it claiming that it was a hoax, etc.  The markets weren't too fond of it either but as the saying goes "two out of three ain't bad."