Spotlight on US Import prices today

USD: Dec '24 is Up at 106.960.

Energies: Jan '25 Crude is Up at 70.71.

Financials: The Mar '25 30 Year T-Bond is Down 5 ticks and trading at 117.03.

Indices: The Dec '24 S&P 500 emini ES contract is 72 ticks Higher and trading at 6079.75.

Gold: The Feb'25 Gold contract is trading Down at 2685.80.

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 Lower with the exception of the Indian Sensex and Singapore exchanges. All of Europe is trading Higher. 

Possible challenges to traders

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

• Lack of Major economic news.

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 after the PPI numbers were released.  The Dow dived 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 - 12/12/24

Dow - Dec 2024- 12/12/24

Bias

Yesterday we gave the markets a Mixed bias and the markets veered to the Downside as it could go in any direction with a Neutral or Mixed bias. The Dow dropped 234 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

Yesterday the all-important PPI numbers were released Thursday, and it showed the month over month PPI number increased to 0.4% versus the 0.2% predicted.  This market isn't very forgiving when it comes to a missed number regardless of how small. Today we don't have much in the way of economic news as we only have Import Prices, out at 8:30 AM EST.