Yesterday we heard from Fed Chair Powell

USD: Jun '25 is Up at 99.315.  

Energies: Jun '25 Crude is Up at 62.53.

Financials: The Jun '25 30 Year T-Bond is Lower by 10 ticks and trading at 114.31.

Indices: The Jun '25 S&P 500 emini ES contract is 80 ticks Higher and trading at 5326.00

Gold: The Jun'25 Gold contract is trading Down at 3342.90

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. Asia traded Mixed.  All of Europe is trading Lower.

Possible challenges to Traders

• Unemployment Claims is out at 8:30 AM EST.  This is Major.
• Philly Fed Manufacturing Index is out at 8:30 AM EST.  This is Major.
• Building Permits is out at 8:30 AM EST.  This is Major.
• Housing Starts is out at 8:30 AM EST.  This is Major.
• Natural Gas Storage is out at 10:30 AM EST.  This is Major.
• FOMC Member Barr Speaks at 11:45 AM 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 dived Lower at around 8:30 AM EST while awaiting retail sales numbers.  The Dow climbed Higher at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Higher at 8:30 AM EST and the ZT moved 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 20 ticks per contract on this trade.   Each tick is worth $6.25.  Please note: the front month for ZT is now Jun '25 and the Dow is Jun '25 as well.  I've changed the format to filled Candlesticks (not hollow) such that it may be more apparent and visible.

Charts courtesy of barcharts

ZT -Jun 2025 - 4/16/25

Dow - Mar 2025- 4/16/25

Bias

Yesterday we gave the markets a Downside bias as both the USD and Bonds were trading Lower.  The Dow dropped nearly 700 points, and the other indices traded Lower 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

So yesterday we heard from Fed Chair Powell on the ramifications of the Trump tariffs, and it didn't make the markets feel very comfortable as all the indices traded Lower.  However, we suggested a Down day for the markets hours before Powell spoke.