Market Watch Essay Example | Topics and Well Written Essays - 2500 words

Market Watch - Essay ExampleWhen we say that markets are not isolated, this is equivalent in saying that studying the economy of one country alone, say the United States being the approximately powerful country in the world, is enough to predict the international frugal and financial gush. Stock traders cede to be keen over the fluctuations in the bond market and bond traders in return must(prenominal) also pay attention to the oscillations of the commodity markets. However, in trading stocks and bonds as well as with the unusual Exchange market (FOREX) it is not compulsory to thoroughly understand the various relationship that exists, all that is infallible that knowledge on specific dashs, flows and oscillations are demonstrated and their cunning applications to trade decisions. Figure 1 shows the relationship between the four markets sectors, the currency (i.e. USD), the commodity market, the bonds, and stocks. As observed in the figure below, USD had a pessimistic influen ce on commodity market, the weak commodity market suggest a raise in the bond market and this raise in bonds in turn influences stocks trend.In order to realize the economic premise the ties commodities, currencies, bonds and stocks, it is necessary to underpin knowledge of the international business cycles and what happens to an economy during expansions and recessions. In most countries specially in the United States of America, the bond is dubbed as an excellent indicator of the economy. A rising bond trend is an indicator that the economy is gaining momentum and strength while a weaker bond market means that on that point is a possibility for economic backlash. During this period, the stock market in turn profits from the fluctuations of the bond market, therefrom traders bonds along with the stock market and vice versa. Bonds and stocks are common indicators of the health of the economy, for they turn down prior(prenominal) to a recession and bottom out if