Bond King's 'Reckoning' Warning: Is Your Portfolio Ready for the US Debt Storm?

on June 12, 2025

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Our View

Globex had a 6021.50–6074.75 trading range and opened Wednesday’s session at 6055.50. CPI rose 2.4% over the year, with a lower-than-expected month-to-month increase. After the open, the ES sold off to 6033.50, rallied up to the 6059 area, sold off down to 6046.50 going into 1:45, and had one last push up to the 6058 level before selling off down to 6006.25 after the 10-year note auction and this headline:

GUNDLACH SAYS ‘RECKONING IS COMING’ FOR US TREASURY DEBT. He also said, “Gold is no longer for lunatic survivalists.”

This, my friends, is the world we live in—another example of a very, very smart guy voicing his opinion. Gundlach was the former head of the TCW Total Return Fund, consistently ranked among the top funds, and is known as the “Bond King” and the Founder of DoubleLine Capital. It’s really hard to overlook what a guy like this has to say.

After the selloff, the ES slowly rallied back up to the 6035 area and settled at 6028.00, down 0.21%, with the NQ down 0.31% on the day.

At the end of the day, the ES did make a new high, but it ran out of gas and the headlines did the rest. Volume picked up with 1.52 million contracts traded. Personally, I am happy that the stock market has rallied so much, but I am also concerned. In the past, when the markets sold off, I had the confidence to say the U.S. was strong and the economy/markets would recover—but I cannot say that today. There is this huge disconnect between current stock market prices in correlation to the dollar and the treasury markets. I am also a strong believer in some of the brightest hedge fund owners in the world casting doubt about the sustainability of the U.S. economy.

Today has two economic reports: Initial Jobless Claims and the Producer Price Index at 8:30, and a $22 billion 30-year bond auction at 1:00.

Our Lean

Everyone and his brother is bad-mouthing the economy, and yet the ES and NQ keep going up. In most cases, when the ES sold off late, it bounced on Globex—which it did—but then rallied up to 6032.00 and reversed back down to 6014.75. This isn’t very significant, but the ES and NQ acted weak late in the day. Just wondering if there will be more selling tied to the late price action this morning.

The ES has rallied 1232.75 points from its 4832.00 low, and the NQ has rallied 5646 points. Let’s face it—after such a big run, there should be letdowns and pullbacks.

Our lean: I am not in love with yesterday’s late price action, and the NQ started getting hit after yesterday’s 10-year note auction at 1:00. I think you have to key into the same time when the 30-year bond auction goes off. I think there is good support at the 6000.00 level down to 5970, and again at the 5950 level. Remember to start looking for the PitBull Thursday low the week before May expiration. The ES has closed higher 6 out of the first 8 sessions in June and has gone a long way. It would not be a bad thing to run some stops on the downside.

I’m going to be looking at buying the early weakness and selling the rallies today. It’s just a hunch, and I could be totally wrong.

MiM and Daily Recap

The S&P 500 futures market experienced a volatile and ultimately negative session, giving back strong overnight gains during the regular trading day. The session began on a positive note during Globex hours, finding a low at 6016.50 at 1:00 AM ET. The 8:30 AM CPI data release then acted as a significant catalyst, igniting a sharp pre-market rally that drove the market 58.25 points (+0.97%) to the session’s peak and overnight high of 6074.75 at 8:46 AM. The Globex session finished positive overall, gaining 16.50 points from its open to its close. However, this strength began to fade as sellers emerged ahead of the cash open, pushing prices down 39.00 points (-0.64%) from the high into the 9:45 AM low of 6035.75.

The regular session opened at 6055.50 and remained choppy. A morning bounce lifted the ES 29.00 points (+0.48%) to the cash session high of 6064.75 at 10:55 AM. This rally was short-lived, as sellers once again took control, driving a 31.25-point (-0.52%) decline to a midday low of 6033.50 at 12:20 PM. A brief afternoon rally added 25.50 points (+0.42%), peaking at 6059.00 at 1:25 PM, but failed to gain traction. The most aggressive sell-off of the day followed, erasing 52.75 points (-0.86%) and establishing the session low of 6006.25 at 2:31 PM. A late-day bounce attempt of 33.25 points (+0.55%) faded, and one final dip shed 26.50 points (-0.44%) to a low of 6013.00. The session ultimately settled at 6028.50, marking a loss of 16.50 points, or -0.27%, from the prior day’s close.

The overall market tone was bearish, characterized by the inability of buyers to sustain any upward momentum during the regular session. The strength seen in the Globex session was completely erased, indicating that sellers were in control once full market participation began. The price action was choppy and rotational, but the prevailing trend was clearly downward, with each rally attempt making a lower high. The day’s 27.00-point loss from the open to the close further underscored the negative sentiment that dominated the cash session.

The Market-on-Close mechanism reflected this weak sentiment. The final reading showed a net sell imbalance of $471 million. The symbol imbalance, a measure of how many stocks were slated to buy versus sell at the close, registered -57.1%. While this figure does not cross the -66% threshold for a strong sell signal, the persistent negative lean in the final minutes likely contributed to the session’s weak finish, preventing any meaningful end-of-day rally. The market concluded the day near its lows, unable to recover from the afternoon sell-off and setting a negative tone heading into the next session.

How to read the MiM

Technical Edge

Fair Values for June 12, 2025

S&P: 3.82
NQ: 17.87
Dow: 22.41

Daily Breadth Data 📊

For Wednesday, June 11, 2025

• NYSE Breadth: 46.57% Upside Volume
• Nasdaq Breadth: 63.54% Upside Volume
• Total Breadth: 61.96% Upside Volume
• NYSE Advance/Decline: 46.84% Advance
• Nasdaq Advance/Decline: 42.66% Advance
• Total Advance/Decline: 44.25% Advance
• NYSE New Highs/New Lows: 66 / 19
• Nasdaq New Highs/New Lows: 196 / 47
• NYSE TRIN: 0.9
• Nasdaq TRIN: 0.40

Weekly Breadth Data 📈

For the Week Ending Friday, June 6, 2025

• NYSE Breadth: 57.71% Upside Volume
• Nasdaq Breadth: 61.29% Upside Volume
• Total Breadth: 59.96% Upside Volume
• NYSE Advance/Decline: 67.12% Advance
• Nasdaq Advance/Decline: 68.02% Advance
• Total Advance/Decline: 67.69% Advance
• NYSE New Highs/New Lows: 188 / 83
• Nasdaq New Highs/New Lows: 411 / 191
• NYSE TRIN: 1.44
• Nasdaq TRIN: 1.32

S&P 500 — ES Futures

https://mrtopstep.com/l/full/

ESM2025

The bull/bear line for the ES is at 6033.00. This level is the key determinant for the day’s directional bias.

Currently, the ES is trading around 6000.25, which is below the bull/bear line, indicating bearish pressure in the early session. If the market continues to hold below 6033.00, sellers may remain in control. The initial support target to the downside is the lower range at 5989.25. A break and hold below this level could open the door to a further decline toward the next support at 5948.00.

For a bullish reversal, buyers need to reclaim the 6033.00 level. A move above this line would shift the intraday sentiment. The first area of resistance is nearby at 6038.75. If bulls can overcome this zone, the primary upside objective is the upper range target at 6076.75. Further strength could push the price toward the next resistance level at 6118.00.

In summary, the market is in a bearish posture while trading below 6033.00. A reclaim of this level is necessary for any significant bullish momentum to build.

NQM2025

The bull/bear line for the NQ is at 21,909.25. This is the key level that will define the trading session’s momentum.

Currently, NQ is trading around 21,804.00, indicating a bearish sentiment as it holds below the bull/bear line. As long as the price stays below 21,909.25, further downside is the more probable path. The next immediate target for sellers is the lower range at 21,713.25. A decisive break below this support could see the decline extend towards 21,529.00.

On the upside, for buyers to take control, they must reclaim the 21,909.25 pivot level. The area just above, up to 21,945.75, will serve as initial resistance. A sustained move through this zone would signal a potential shift in momentum, with the upper range target at 22,105.25 being the primary objective. The next significant resistance above that level is 22,289.75.

Overall, the intraday trend remains bearish while below 21,909.25. A move above this critical line is required to invalidate the current downward pressure and suggest a potential bullish reversal.

Trading Room News:

Polaris Trading Group Summary: Wednesday, June 11, 2025

Wednesday’s session in the Polaris Trading Group room was marked by precise technical execution and a disciplined approach in a volatile, news-driven environment.

Pre-Market Setup & Key News

The day began with a comprehensive sharing of PTG resources and links, setting a solid foundation for strategy.
A strong quote was shared: “Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee, reinforcing the PTG mindset.
Pre-market macro catalysts included breaking headlines from Trump regarding a U.S.-China deal involving steep tariffs (55% from the U.S., 10% from China), and softer-than-expected CPI data:
- CPI MoM: 0.1% (vs 0.2% expected)
- Core CPI MoM: 0.1% (vs 0.3% expected)

Morning Session: High Precision Execution

@ES: The market responded favorably to CPI, hitting Initial Target Zone and Money Box Target 6065–6071 quickly.
@NQ: Similarly, the bull scenario played out with ultra-precision, reaching the 22063–22092 zone as outlined in the Daily Trade Strategy.
The early lean from David was short-side out of the gate, with a clear sandbox range identified and adjusted in real time.
Shortly after, David shifted to a buy-side lean around the 6050–6055 zone once technical conditions (C&C) aligned—demonstrating excellent adaptability.

Midday: Choppy Conditions

The market transitioned into a “chop chop” zone late morning, confirmed by David and supported by visual charts.
Despite a lack of clear edge midday, the team maintained discipline and refrained from forcing trades.
A key teaching moment from W.D. Gann was shared: “The safest place to look for a new trade is at the end of the first correction to a new swing.”

Afternoon Session: Bear Scenario Plays Out

In the afternoon, Bear Scenario activated as price broke below 6040, targeting and fulfilling the 6020–6015 zone with precision.
David highlighted this as a long liquidation phase, supported by negative headlines (e.g., China unwilling to halt fentanyl).
Action picked up into the close with rotational swings offering opportunity and a $1.3B MOC sell imbalance.
Price approached the Cycle Day 1 Low of 6006.25, making the 6000–6005 zone critical for bulls to defend heading into the next session.

Key Lessons & Takeaways

Probability over prediction was a core message reiterated: follow rules with positive expected value, not hope.
Strong execution came from staying aligned with the trade plan, adjusting lean when conditions changed, and exercising patience during chop.
Multiple target zones were hit with precision, underscoring the value of the Daily Trade Strategy Briefing and real-time commentary.

Summary: June 11 was a textbook day for executing both bull and bear scenarios with clarity and adaptability. Traders who followed David’s guidance had clear setups, respected zones, and captured meaningful moves while avoiding unnecessary trades during low-edge periods. A great example of disciplined, probabilistic trading.

DTG Room Preview – Thursday, June 12, 2025

Trade Policy Shifts: Treasury Sec. Bessent hinted that Trump may extend tariff pauses for cooperative countries, while Trump warned of unilateral tariffs in letters to be sent soon. A tentative US-China deal includes eased rare earth export restrictions and a 55% tariff imposition on Chinese goods. Trump also agreed to allow Chinese students back into US colleges.
Geopolitics & Oil: Oil surged over 5% amid US-Iran nuclear tensions. Trump expressed doubts about reaching a deal, while Iran threatened retaliation if attacked. US embassy staff in Baghdad are being evacuated.
Budget Battle: Conflicting estimates over Trump’s fiscal bill show an $11T gap. The White House projects $8T surplus vs. external projections of a $3T deficit. Critics argue the assumptions are unrealistic and deficit-increasing.
Market Movers: Oracle (ORCL) jumped 7% post-earnings after raising growth outlook, citing strong AI-driven cloud demand. Adobe (ADBE) reports after the bell.
Today’s Calendar: Key economic data includes PPI and Unemployment Claims at 8:30am ET. Fed is in blackout mode pre-FOMC.
Market Technicals: Volatility edged higher. ES is in an uptrend channel with key levels at 5956/59 (support), 5903 (200-day MA), and resistance at 6143/48. Bearish whale bias into the morning data on notable overnight flows.