Intermarket Relationships Show Commodities To Be Strongest


Past performance is not an indicator of future results
Source: www.tradingview.com

In the monthly chart above we show the long term relative strength between the major financial markets post the pandemic lows (dashed blue vertical):
1. Stocks [represented by the S&P 500 (SPX)].
2. Bonds [represented by the iShares 7-10 Treasury ETF (IEF)].
3. Commodities [represented by the Thomson Reuters CRB Index (TRJEFFCRB)].

The top chart shows the relative strength (RS) between stocks and bonds. The RS is between the upper blue and upper red bands - the area of strength for the numerator. Therefore, stocks are outperforming against bonds.

The middle chart shows the relative strength (RS) between stocks and commodities. The RS is between the lower blue and lower red bands - the area of weakness for the numerator. Therefore, stocks are underperforming against commodities.

Trade the News: View our Economic Calendar

The lower chart shows the relative strength (RS) between commodities and bonds. The RS is between the upper blue and upper red bands - the area of strength for the numerator. Therefore, commodities are outperforming against bonds.

Please note that the commodity weighting for TRJEFFCRB: Energy: 39%, Agriculture: 41%, Precious Metals: 7%, Base/Industrial Metals: 13%.
Source: www.tradingeconomics.com

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Risk Warning: Our service includes products that are traded on margin and carry a risk of losses in excess of your deposited funds. The products may not be suitable for all investors. Please ensure that you fully understand the risks involved.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)