The day after the Fed

USD: Mar '25 is Up at 103.580.  

Energies: Apr '25 Crude is Up at 66.95.

Financials: The Jun '25 30 Year T-Bond is Higher by 23 ticks and trading at 118.07.

Indices: The Mar '25 S&P 500 emini ES contract is 84 ticks Lower and trading at 5709.00.

Gold: The Apr'25 Gold contract is trading Down at 3039.90.

Initial conclusion

This is not a correlated market.  The USD is Up and Crude is Up which is not normal, and 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. All of Asia traded Mixed.  All of Europe is trading Lower.

Possible challenges to traders

• Unemployment Claims are out at 8:30 AM EST.  This is Major.

• Philly Fed Manufacturing Index is out at 8:30 AM EST.  This is Major.

• Current Account is out at 8:30 AM EST.  This is Major.

• Existing Home Sales is out at 10 AM EST.  This is Major.

• CB Leading Index m/m is out at 10 AM EST.  This is Major.

• Natural Gas Storage is out at 10:30 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 veered Lower at around 8:30 AM EST with no news pending at that time.  The Dow moved 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 $7.625.  Please note: the front month for ZT is now Jun '25 and the Dow is still Mar '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 -Jun 2025 - 3/19/25

Dow - Mar 2025- 3/19/25

Bias

Yesterday we gave the markets a Neutral or Mixed bias as it was FOMC Day, and we always maintain a Neutral bias on that day.  Why?  Because the markets have never shown any sense of normalcy on that day.  The Dow gained 374 points, and the other indices advanced as well.  Today we aren't dealing with a correlated market, and our bias is to the Downside.

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

Commentary

Well, the news was released at 2 PM yesterday and it appears that the Federal Reserve kept rates the same and didn't Lower or Raise.  I think the markets appreciated that and the indices gained on the session.  Will we see more of the same today?  Time will tell.