Intermarket Analysis for Global Macro Trading: Seeing the Whole Chessboard

Think about the last time you tried to understand a complex situation. Maybe it was a family argument, or a problem at work. You know that feeling—the one where you realize you’re only seeing one piece of the puzzle? Well, trading based on a single market, like just stocks or just currencies, is a lot like that. You’re missing the bigger picture.

Intermarket analysis flips the script. It’s the art and science of studying the connections between different asset classes—currencies, bonds, commodities, and equities—to spot the underlying macroeconomic story. For the global macro trader, it’s not just a tool; it’s the essential lens. It’s how you move from being a player who only sees their own pieces to becoming the one who sees the entire chessboard.

Why Intermarket Relationships Aren’t Just Theory

Markets don’t exist in a vacuum. They’re in a constant, noisy, and often messy conversation with each other. These relationships are driven by fundamental economic forces. Ignoring them is, frankly, like trying to navigate a city with a map of just one neighborhood.

Let’s get concrete. One of the most powerful and watched relationships is between the U.S. Dollar (USD) and Commodities. Most major commodities—like oil, copper, gold—are priced in dollars. So, when the dollar strengthens, those commodities become more expensive for buyers using euros, yen, or yuan. That tends to dampen demand and push prices lower. A weak dollar does the opposite. It’s a fundamental pricing mechanism, not a coincidence.

The Bond Market: The Ultimate Tip-Sheet

If you had to pick one market to watch above all others in a macro framework, it should probably be the bond market. Specifically, government bond yields. They’re the closest thing we have to a real-time read on the market’s expectations for growth, inflation, and central bank policy.

Here’s the deal: rising bond yields (falling prices) often signal expectations of stronger growth or higher inflation. That can be good for the currency of that country, as it hints at potential interest rate hikes. But it can be terrible for growth stocks, whose future earnings look less attractive when discounted at higher rates. See how one signal ripples out?

The bond-equity relationship is particularly fickle. Sometimes they move together (risk-on), sometimes they invert (risk-off). Discerning why they’re moving is the intermarket analyst’s core job.

Building Your Intermarket Analysis Toolkit

Okay, so you’re convinced. How do you actually start? You don’t need a PhD, but you do need a structured approach. Think of it as building a dashboard of dials and gauges, not just a single speedometer.

1. The Core Four Asset Classes

Always have these four charts up, side-by-side:

• Currencies (FX): Especially the DXY (U.S. Dollar Index) or major pairs like EUR/USD, USD/JPY. The dollar is the world’s reserve currency, so it’s ground zero.
• Bonds: Watch the 10-year Treasury yield like a hawk. Also, keep an eye on the 2-year yield for policy expectations and the yield curve (the spread between them).
• Commodities: Oil (WTI or Brent) for growth/energy inflation, Copper (“Dr. Copper”) for industrial demand, and Gold for real yields & safe-haven flows.
• Equities: Broad indices (S&P 500, MSCI World) and sector ETFs. Are cyclicals or defensives leading? That tells a story.

2. Key Ratios and Spreads to Monitor

Sometimes the story is in the relative performance. These ratios cut through the noise:

Ratio/Spread	What It Tells You
Gold / S&P 500	Risk appetite. Rising ratio = defensive, risk-off sentiment.
Copper / Gold	Growth vs. safety. “Copper up, Gold down” often signals optimism.
Utilities Sector (XLU) / S&P 500	Another classic risk-off gauge. Utilities are bond proxies.
10-Year Yield / 2-Year Yield Spread	The yield curve. Inversion is a famed recession warning.

3. The Causation vs. Correlation Trap

This is crucial. Just because two things move together doesn’t mean one causes the other. They might both be reacting to a third, unseen factor. Your job is to be a detective. Is the dollar down causing oil up, or are both reacting to a sudden dovish shift from the Fed? You have to dig for the narrative.

A Real-World Scenario: The Inflation Shock Playbook

Let’s walk through a recent pain point—the post-pandemic inflation surge—using intermarket logic.

Step 1: Commodities (oil, food, metals) start screaming higher. This is your first signal of supply-chain and demand pressure.

Step 2: Bond markets react. Traders price in future central bank action. Bond yields begin to climb, sharply. The yield curve might start to flatten.

Step 3: The currency market adjusts. If the Fed is seen as the most hawkish central bank, the dollar (USD) starts to rally on expected rate differentials.

Step 4: Equities feel the pinch. High-valuation tech and growth stocks, sensitive to those higher discount rates, start to underperform. Defensive sectors or commodity-linked stocks might hold up better.

See the cascade? An intermarket trader wouldn’t be surprised by Step 4 because they saw the story unfolding in Steps 1-3. They might have even positioned for it.

The Human Element: It’s a Mindset, Not Just a Model

Honestly, the hardest part isn’t learning the relationships. It’s developing the discipline to constantly look outside your own bias. An equity bull might ignore rising yields. A forex specialist might dismiss a breakdown in copper. Intermarket analysis forces humility—it constantly asks, “What am I missing?”

And these relationships… well, they evolve. They’re not static laws. The rise of passive investing, quantitative easing, and now AI-driven flows have all altered the playbook slightly. You have to be adaptive. The map gets redrawn, and you have to redraw it with the market.

So, where does this leave us? Intermarket analysis for global macro trading isn’t about finding a magic crystal ball. It’s about building a richer, more contextual understanding of the financial ecosystem. It’s about connecting dots others are ignoring. In a world drowning in data but starving for wisdom, that ability to synthesize—to see the story in the symphony of markets—is what separates the reactive from the proactive. The chessboard is there. The question is, how many of the pieces are you truly watching?