Tales of a Technician: Will 2018 be the Year of the Commodity Comeback?

Bonds lead due to their interest rate sensitivity. They rise first when the economy hits the skids and the Fed starts lowering interest rates. They fall first when the economy is heating up and the Fed starts rising interest rates.

Commodities lag since they’re driven by inflationary pressures. They rise last because inflation doesn’t kick into high gear until the economy is firing on all cylinders. Typically this occurs during the latter stage of an economic recovery. And they fall last since inflation doesn’t typically abate until after the economy begins to falter.

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