Treasury pick propels markets

USD: Dec '24 is Down at 106.755.

Energies: Jan '25 Crude is Up at 69.68.

Financials: The Dec '24 30 Year T-Bond is Down 12 ticks and trading at 117.29.

Indices: The Dec '24 S&P 500 emini ES contract is 56 ticks Higher and trading at 6021.50.

Gold: The Dec'24 Gold contract is trading Up at 2633.10.

Initial conclusion

This is not a correlated market.  The USD is Down and Crude is Up which is 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 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. All of Asia traded Lower with the exception of the Hang Seng which is Higher.  All of Europe is trading Lower. 

Possible challenges to traders

• S&P/CS Composite-20 HPI y/y is out at 9 AM EST.  This is Major.

• HPI m/m is out at 9 AM EST.  This is Major.

• CB Consumer Confidence is out at 10 AM EST.  This is Major.

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

• Richmond Manufacturing Index is out at 10 AM EST.  This is Major.

• FOMC Meeting Minutes 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 7:30 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 7:30 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 30 ticks per contract on this trade.   Each tick is worth $7.625.  Please note: the front month for ZT is Dec and the Dow is now 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 -Dec 2024 - 11/25/24

Dow - Dec 2024- 11/25/24

Bias

Yesterday we gave the markets an Upside bias and the markets didn't disappoint.  The Dow gained 440 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

Yesterday the markets applauded President Trump's pick for Treasury Secretary, Mr. Scott Bessent.  So, what do we know about Mr. Bessent?  He's a Wall Street Hedge Fund manager who worked for George Soros a couple of times.   He is highly regarded in the finance community, and I believe this led President Trump to pick him.  Of all the nominees that Trump has picked for his cabinet thus far, I would say Scott Bessent is probably the most qualified.  The once concern I would have with him is given, he is a hedge fund manager; will his decisions profit the country at large or his own private interests?  Time will tell on that one but so far, he is welcome news for this market.