Intermarket Analysis: Stocks, Bonds, Commodities, FX

Most beginners stare at one chart and ignore everything else. Professional traders read four markets at once because those markets are constantly whispering to each other. Intermarket analysis is the practice of listening to all four.

The four asset classes

Every trade you take lives inside a web of relationships:

• Stocks reflect corporate earnings expectations and risk appetite
• Bonds reflect the cost of capital and the safety bid
• Commodities reflect real economic demand and inflation pressure
• Currencies reflect relative capital flows between economies

A move in any one of these rarely happens in isolation. When the 10-year yield spikes, growth stocks often wobble. When oil rips, the Canadian dollar strengthens. When equities sell off, the Japanese yen and US Treasuries catch a bid.

The classic relationships

John Murphy formalized the core intermarket framework, and the relationships still hold in most regimes:

1. Bonds vs. stocks: normally inversely correlated. Falling bond yields (rising prices) tend to support equity multiples. When both fall together, something is breaking.
2. Commodities vs. bonds: normally inversely correlated. Rising commodity prices push inflation expectations up, dragging bond prices down.
3. Commodities vs. dollar: inversely correlated. Most commodities are priced in dollars, so a stronger dollar makes them more expensive for foreign buyers.
4. Dollar vs. stocks: loosely inversely correlated in risk-on regimes, but this one flips often.

Why it matters for a single-chart trader

You might trade EUR/USD and never look at a bond chart. But if the US 10-year yield is breaking out, the dollar is likely to strengthen, and your EUR/USD long is fighting a macro headwind. Intermarket analysis tells you when the wind is at your back and when it's in your face.

A practical workflow

Before the session opens, build a one-page macro snapshot:

• DXY — is the dollar trending or range-bound today?
• US 10-year yield — rising, falling, or flat on the day?
• S&P 500 futures — risk-on or risk-off?
• Gold and oil — what are commodities saying about inflation and growth?

If those four agree with your trade thesis, your edge is amplified. If they disagree, you're picking a fight with the macro tape.

The catch: correlations shift

Intermarket relationships are not laws of physics. In deflation scares, bonds and stocks can rise together. In stagflation, commodities and bonds can rise together while equities fall. The first job is to know the current regime, not the textbook one.

The bottom line

Intermarket analysis turns a single chart into a window onto the whole market. You stop trading in a vacuum and start trading with the macro current. That shift alone is worth more than most indicators combined.