Trade wars begin

USD: Jun '25 is Down at 101.650.  

Energies: May '25 Crude is Down at 68.26.

Financials: The Jun '25 30 Year T-Bond is Higher by 38 ticks and trading at 119.06.

Indices: The Jun '25 S&P 500 emini ES contract is 748 ticks Lower and trading at 5524.00

Gold: The Jun'25 Gold contract is trading Down at 3119.60

Initial conclusion

This is not a correlated market. The USD is Down and Crude is Down which is not 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 Lower and Crude is trading Lower which is not correlated. Gold is trading Lower which is not 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 mainly Higher with the exception of the Hang Seng and Singapore exchanges.  However, all of Europe is trading Lower. with the exception of the Spanish Ibex exchange.

Possible challenges to traders

• Challenger Job Cuts m/m is out at 7:30 AM EST.  This is Major.

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

• Trade Balance is out at 8:30 AM EST.  This is Major.

• Final Services PMI is out at 9:45 AM EST.  This is Major.

• ISM Services is out at 10 AM EST.  This is Major.

• Natural Gas Storage is out at 10:30 AM EST.  This is Major.

• FOMC Member Jefferson Speaks at 12 noon EST.  This is Major.

• FOMC Member Cook Speaks at 2:30 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 veered Higher at around 8:15 AM EST with no real economic news to speak of at that time.  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 8:15 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 a dozen 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 - 4/02/25

Dow - Mar 2025- 4/02/25

Bias

Yesterday we gave the markets a Neutral or Mixed bias.  The markets traded Higher on the session as the Dow climbed 235 points Higher and the other indices closed Higher as well.  Mind you this was the calm before the storm.  Today we aren't dealing with a correlated marekt and our bias is Neutral or Mixed.

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

Commentary

So Trump addressed the nation at 4 PM EST (after the market closed) and announced his intention to raise tariffs to every nation across the board. China will be levied with a 35% increase, the EU will be raised to 20%.  It is Trump's intent to browbeat the nations of the world to come to the table and reconsider that nations tariff rate to the USA. This is what Trump does; he bullies and complains until he gets his way. This may work in the short term but sooner or later nations get wise to what's happening and the bullying doesn't work so well. Want to learn Market Correlation and determine market direction hours before the Opening Bell?