Intermarket Analysis

Intermarket analysis is a form of analysis which attempts to analyze one type of asset class to gain insight to what will happen to another asset class. For example, if the Federal Reserve lowers interest rates, then bonds will be directly positively impacted, and stocks may gain. Increased activity in the economy may lead to higher commodity prices, which may lead to higher inflation and the Federal Reserve may increase interest rates.

The difficulty with this type of analysis is that the loop is so intertwined it may be difficult to determine where the loop begins.

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