Level 8 · Lesson 9
Commodities, Bonds
& Intermarket Analysis
Markets are not isolated planets. They’re a connected solar system. Bonds lead, equities follow, commodities confirm, and the Dollar reacts to all three.
First — Why This Matters
🌌 The Financial Solar System
The solar system doesn’t have isolated planets. Gravity connects everything. When Jupiter moves, its moons follow. When the sun flares, every planet feels it. Financial markets work the same way.
Bonds are the inner planet — closest to the gravitational centre (interest rates), first to move. Equities are the outer planet — they follow 3-6 months later. Trading forex without watching bonds and commodities is like navigating space while ignoring gravity.
🔎 REAL SCENARIO
October 2023: Bond yields hit 5% (16-year high). Gold was “supposed to” drop (high yields = Gold negative). Instead, Gold rallied to $2,070 — because geopolitical fear (Israel-Hamas) overrode the yield relationship. Traders using intermarket analysis saw the conflict: yields said “sell Gold,” geopolitics said “buy Gold.” The ones who understood the hierarchy of drivers won.
01 — The Intermarket Rotation
Bonds Lead. Equities Follow. Commodities Confirm.
The rotation that has repeated for over 100 years of market history.
02 — The Yield Curve
The Bond Market’s Crystal Ball
Normal, flat, and inverted — each tells a different story about the future.
03 — The 4 Markets Connected
Gold, Oil, Bonds & Equities
04 — The Rotation Sequence
The Predictable Order of Turns
1. Bonds turn first
Yields start falling (prices rising). Smart money pricing in slowdown or rate cuts. Equities may still be rising — this is the divergence warning.
2. Equities follow
2-4 months after bonds. Growth stocks lead the decline. Defensive sectors (utilities, healthcare) outperform. The equity market admits what bonds already knew.
3. Commodities confirm
Demand-driven commodities (copper, oil) fall as industrial activity slows. This confirms the contraction. Gold may RISE (safe haven) while industrial commodities fall.
4. Dollar reacts
Initially strengthens (safe haven). Then weakens as the Fed cuts rates. The USD direction FLIP is one of the most tradeable intermarket signals.
05 — Interactive Challenge
Intermarket Signal Board
Input the direction of 4 markets. Get the current regime, what comes next, and trading implications.
📈 Equities
📜 Bond Prices (Yields inverse)
💵 US Dollar (DXY)
🛢️ Commodities (Oil, Copper)
Select a direction for each market to identify the regime.
06 — Commodity-Currency Links
Currencies That Follow Commodities
CAD = OIL = Canada’s #1 export. Oil up = CAD up. Oil collapse = CAD collapse. Check oil before trading USD/CAD.
AUD = IRON ORE + CHINA = Australia exports iron ore to China. Chinese demand down = AUD down. China stimulus = AUD up.
NZD = DAIRY + RISK = New Zealand exports dairy. But NZD also acts as a pure risk-on/off currency. Highly correlated with AUD.
NOK = OIL (Europe) = Norway’s oil fund is the world’s largest. NOK tracks oil closely. Less liquid than CAD but same dynamic.
07 — When Relationships Break
The Exception That Proves the Rule
GOLD + USD BOTH RISING = Extreme fear. Both safe havens bid simultaneously. This is a CRISIS signal, not normal.
BONDS + EQUITIES BOTH FALLING = Stagflation or liquidity crisis. The traditional 60/40 portfolio fails. Cash and Gold are the only winners.
OIL RISING + EQUITIES FALLING = Supply shock inflation. Growth threat + inflation pressure. Central banks are stuck between two mandates.
THE RULE = When normal relationships break, something unusual is happening. These are the moments to REDUCE risk and INCREASE analysis.
08 — Common Mistakes
4 Intermarket Errors
09 — Cheat Sheet
Intermarket Quick Reference
BONDS LEAD = If yields are falling while equities are still rising, the bond market is warning you. Listen. 3-6 month lead.
GOLD = ANTI-DOLLAR = Check DXY before every Gold trade. Exception: Gold + USD both up = crisis. This is the fear signal.
OIL = INFLATION FUEL = Oil above $90 = watch for hot CPI. Oil flows through to CAD, NOK, and headline inflation within 1-2 months.
4-MARKET CHECK = Bonds + Equities + Commodities + Dollar. When 3 of 4 agree, conviction is high. When they conflict, reduce size.
THE RULE = Markets are a connected system. Trading one without watching the others is flying blind. Intermarket context = macro conviction.
10 — Test Your Understanding
Intermarket Regime Game
5 scenario-based rounds. Read the intermarket signals, identify the regime, make the call.
Current readings: S&P 500 at all-time highs. Bond yields rising (prices falling). Oil at $92. Copper at 6-month high. USD stable. Your macro bias was risk-on.
11 — Knowledge Check
Final Quiz — 8 Questions
Question 1 of 8
Bond yields have been falling for 4 months while equities are still at all-time highs. This divergence signals:
Question 2 of 8
Gold is rallying while DXY is also strengthening. This unusual combination signals:
Question 3 of 8
Oil rises from $75 to $95 over 2 months. The MOST immediate trading implication is:
Question 4 of 8
The intermarket rotation order is:
Question 5 of 8
Equities falling + Bond prices rising + Commodities falling + USD strengthening. This is:
Question 6 of 8
The yield curve inverts in January. Historically, a recession arrives in:
Question 7 of 8
AUD/USD is in a downtrend. Iron ore prices collapse. Copper is falling. This confirms:
Question 8 of 8
Intermarket analysis helps forex traders by: