Four sectors of the financial market


To link to the dollar bond and equity markets become more transparent, it is necessary to revert to the commodity markets. In the analysis of the four sectors of the financial market must adhere to the following sequence. The stock market is very sensitive to changes in interest rates and, therefore, the dynamics of the bond market. The bond market depends on inflation expectations, which are reflected in the dynamics of commodity markets. But the inflationary impact of commodity markets is largely determined by the dynamics of the dollar.

Thus, for distribution to the entire system of the inflationary effect of a dollar collapse, it takes time. Therefore, the depreciation of the dollar and the accompanying inflation would affect the bond market only when they start rising commodity markets. Conversely, the growth of the dollar causes a rise in prices of bonds and shares, when they begin to fall in the price of goods [1]. Graphics commodity prices (index CRB) and the U.S. Dollar Index below confirm two basic premises: first, the rising dollar has a bearish impact on the index CRB, and the weakening of the dollar - bullish, second, turns the dollar ahead of reversals index CRB. So, turn on the commodity market in 1996, there was only nine months after the reversal of the dollar index in 1995, in 1998-1999. timing period of six months, in 2001 - three months.

On these charts less clear link between the minimum dollar in 1998 and the top of the CRB Index in 2000, but the market dollar after rapid growth over three years (1995-1998), a period of eighteen months in length (mid-1998 at the beginning of 2000), during which the dollar index could not overcome the resistance area 103 ... 104. The weakness of the dollar at the time expressed in stopping its growth. And only overcome them in early 2000, this area of resistance led to the formation of the top in the markets at the end of the year.

During 2002-2003. both markets have pronounced tendencies - the dollar falls, commodities are rising. And now we can conclude that rising commodity prices will continue as long as the dollar's decline is over. Therefore, a new low on the chart of the dollar index, formed in June 2003, indicates that the top of the market for goods has not yet emerged, and the goods are likely to continue to rise, breaking up the February 2003.

Communication via gold

If as a link in the analysis of the influence of the dollar on bonds and equities appears commodity market, the problem of timing between the dollar and commodity market eliminates switching between the gold market. Indeed, on the one hand, gold has a strong feedback to the dollar, which can be explained the role of gold as an asset, "asylum" in periods of instability. On the other hand, gold is the commodity market index from the CRB, a global reversals which appear before the reversal of the commodity market as a whole, making it a leading indicator of inflation.

Thus, it is shown that the reversal in the gold market turns ahead of commodity prices. In 1996, the peak of the gold market was formed earlier in the three months. The top 1999 ahead of the top products on the market in 2000 for one year. "Golden" bottom in 2001 formed earlier trade for seven months.