Trade wars continue

USD: Jun '25 is Down at 99.735.  

Energies: May '25 Crude is Up at 60.15.

Financials: The Jun '25 30 Year T-Bond is Higher by 4 ticks and trading at 114.00.

Indices: The Jun '25 S&P 500 emini ES contract is 146 ticks Higher and trading at 5336.50

Gold: The Jun'25 Gold contract is trading Up at 3228.80

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Up which is normal, but 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 Higher which is not 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 Higher with the exception of the Indian Sensex.  All of Europe is trading Higher with the exception of the German Dax and the Milan exchanges.

Possible challenges to traders

• Core PPI m/m is out at 8:30 AM EST.  This is Major.

• PPI m/m is out at 8:30 AM EST.  This is Major

• Preliminary UOM Consumer Sentiment is out at 10 AM EST.  This is Major.

• Preliminary UOM Inflation Expectations is out at 10 AM EST.  This is Major.

• FOMC Member Musalem Speaks at 10 AM EST.  This is Major.

• FOMC Member Williams Speaks at 11 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 climbed Higher at around 7:35 AM EST with no economic news is sight.  The Dow moved Lower at the same time.  Look at the charts below and you'll see a pattern for both assets. The Dow moved Lower at 7:35 AM EST 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 20 plus 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 - 4/10/25

Dow - Mar 2025- 4/10/25

Bias

Yesterday we gave the markets a Downside bias as the Bonds and Gold were both trading Higher Thursday morning and this is indicative of a Down day.  The markets didn't disappoint as the Dow dropped 1,015 points and the other indices lost 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

So, Wednesday El Presidente called for a 90 day pause on the tariffs and the markets soared. Yesterday everyone realized that we are not safe from inflation or tariffs as Trump bumped China's tariff rate to 145%.   Want to learn Market Correlation and determine market direction hours before the Opening Bell?