Can Richmond Manufacturing Index and the Beige Book impact market sentiment?

June '24 has seen a rise in USD at 104.755 and an increase in Crude at 80.41. However, the June '24 30 Year T-Bond has decreased by 14 ticks, trading at 115.11. Additionally, the Jun '24 S&P 500 emini ES contract is 144 ticks lower, trading at 5288.75, while Gold is also trading down at 2344.90.

This lack of correlation in the market is evident with the USD and Crude trading up, contrary to the 30 Year T-Bond trading down. The S&P and Crude are showing correlation, but Gold is moving inversely to the USD. Traders need to stay cautious when the market lacks correlation, signaling a potential issue. Asia is generally trading lower, except for the Shanghai exchange, while all of Europe is trading down.

Potential Trade Influencers

Today, traders face several key events that could impact trading sentiment. The Richmond Manufacturing Index will be released at 10 AM EST, followed by FOMC Member Williams speaking at 1:45 PM EST. The highly anticipated Beige Book will then be released at 2 PM EST, with FOMC Member Bostic speaking later in the evening.

Market Insights

Traders are advised to monitor the shift from the 2-year to the 10-year Bond instrument and observe the correlation between the 10-year Treasury notes (ZN) and the S&P futures contract. Yesterday, the ZN moved lower around 10 AM EST, coinciding with a drop in the S&P, demonstrating a reverse correlation between the two assets.

Chart analysis indicates potential trade opportunities based on these correlations, with yesterday presenting a short opportunity on the 10-year note. Traders could have capitalized on this move, earning significant ticks per contract.

Market Outlook

Following a mixed or neutral bias in the previous session, today's market sentiment leans towards the downside. Despite the typical post-holiday surge in activity, recent market movements have been unpredictable. With the release of the Richmond Manufacturing Index and Beige Book later today, traders are eager to see if these reports will be enough to reverse the current market trend.

Conclusion

The combination of key economic reports and market correlations will play a crucial role in shaping market sentiment today. Traders should remain vigilant and adapt their strategies accordingly as market conditions evolve.