By Areena FxUSD: Dec ’25 is Down at 97.650.
Energies: Nov ’25 Crude is Down at 64.45.
Financials: The Dec ’25 30 Year T-Bond is Higher by 23 ticks and trading at 116.24.
Indices: The Sep ’25 S&P 500 emini ES contract is 146 ticks Higher and trading at 6733.00.
Gold: The Dec’25 Gold contract is trading Up at 3847.70.
Initial conclusion
This is not a correlated market. The USD is Down and Crude is Down which is not 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 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. Asia traded Mixed. All of Europe is trading Higher except the Milan exchange.
Possible challenges to traders
- FOMC Member Waller Speaks at 7:30 AM EST. Major.
- FOMC Member Hammack Speaks at 8 AM EST. Major.
- Pending Home Sales is out at 10 AM EST. Major.
- FOMC Member Musalem and Williams Speak at 1:30 PM EST. 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.
On Friday the ZT climbed Higher at around 9 AM EST with multiple eco 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 9 AM EST and the ZT climb 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 15 plus ticks per contract on this trade. Each tick is worth $6.25. Please note: the front month for ZT is now Dec ’25 and the Dow is now Dec ’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 – 9/26/25
Dow – Sep 2025- 9/26/25
Bias
On Friday we suggested an Upside Day, and the markets didn’t disappoint. The Dow closed Higher by 300 points and the other indices gained ground 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
Well as the old adage goes, what goes Down must certainly go Up and vice versa. The markets didn’t disappoint but we have multiple challenges this week. We have a potential government shutdown that may happen as early as tomorrow, and we have Non-Farm Payrolls on Friday.