The general idea of this section is to show how commodities prices interact with the financial markets and the economy. Composite commodities indexes, as well as the individual series, can be extremely volatile. Most of the indexes have components that can be influenced by the weather, making those indexes overall subject to unforeseen disturbances. Therefore, it is best to observe them over time. The following three examples compare the year-over-year change in the Reuters/Jefferies CRB index with the stock market, the economy, and the benchmark 10-year Treasury note.
Commodities are used in the process of goods’ production, as well as in the service sector. And because corporate performance may be measured by trends in the S&P 500, we see a relatively solid relationship between the S&P 500 and the Reuters/Jefferies CRB Index, as shown in FIGURE 14.8.
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