The Avanti Group Reviews: Markets 101 │ DAILYMOTION
Posted in the Mesquite Forum
#1 Mar 6, 2013
Markets 101: Stocks, Bonds, Currencies and Commodities
Here's a primer on market movement
By John Lansing, Editor, Parabolic Options | Mar 4, 2013, 10:50 am EST
Technical analysis can seem very overwhelming when trying to understand the process and behavior patterns of inter-market relationships and correlations. With technology today, we have the ability to watch every currency, stock market average, commodity, and even the bond markets around the globe.
Lets simplify how commodities, bonds, currencies and stocks all interact and the consequences they have on one another.
As commodity prices rise, the cost of goods moves higher. The commodity rise increases prices, which is viewed as inflationary, so a natural response to increasing commodity prices is a rise in interest rates because the price action in commodities requires a response. That response, more often than not, is higher interest rates to keep the balance.
Now, because the correlation between rising interest rates and bond prices are inverse, bond prices fall as yields rise, which simply means higher interest rates.
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