Today we have the Beige Book and Chairman Powell will be speaking

USD: Dec '24 is Up at 106.515.

Energies: Jan '25 Crude is Up fractionally at 70.05.

Financials: The Mar '25 30 Year T-Bond is Down 18 ticks and trading at 118.20.

Indices: The Dec '24 S&P 500 emini ES contract is 70 ticks Higher and trading at 6080.50.

Gold: The Feb'25 Gold contract is trading Down at 2664.30.

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 Higher with the exception of the London exchange.

Possible challenges to traders

ADP Non-Farm Employment Change is out at 8:15 AM EST. This is Major.
FOMC Member Musalem Speaks at 8:45 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.
Factory Orders m/m is out at 10 AM EST. This is Major.
Crude Oil Inventories is out at 10:30 AM EST. This is Major.
Fed Chair Powell Speaks at 1:45 PM EST. This is Major.
Beige Book is out at 2 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 migrated Higher at around 8:30 AM EST with no economic news pending. The Dow migrated Lower at the same time. Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 8:30 AM and the ZT moved 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 a dozen ticks per contract on this trade. Each tick is worth $7.625. Please note: the front month for ZT is now Mar '25 and the Dow is still Dec '24. 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 2025 - 12/03/24

Dow - Dec 2024- 12/03/24

Bias

Yesterday we gave the markets an Upside bias as both the USD and the Bonds were Lower Tuesday morning. The Dow closed Lower by 76 points, but the S&P and Nasdaq both migrated Higher. 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

Yesterday the markets traded mainly Higher, but the Dow migrated Lower. All in all, it was a mixed day but today we have the Beige Book and Chairman Powell will be speaking. Hopefully he may give us some insight as to what the Federal Reserve is planning to do or at the very least might do. Will he do this? Only time will tell.

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