The Week Ahead: S&P 500 To Commodities Ratio May Tell A Story

As commodities rise, are there any clues about the direction of broader US markets? Measuring correlations can help spot trends across asset classes.

As we head into the new week, we want to be aware of the impending data releases that can affect timing and sentiment. This week looks to be a mild to moderate week on the US economic data side of things, with the largest market impact event happening on Thursday, May 27, in the form of Preliminary GDP q/q (quarter over quarter).

This number is reported in an annualized fashion. Market participants are forecasting a print of 6.4%. Also, bear in mind that this is the Preliminary GDP number. There are three different GDP data releases, the Advance GDP (earliest indication and usually most impactful on markets), Preliminary GDP (this one), and then Final. A bullish print usually strengthens the US dollar (not always, but usually).

Other than the GDP print, FOMC members Brainard and Bostic speak on Monday morning, FOMC member Evans speaks on Tuesday morning, and we have Consumer Confidence data on Tuesday, as well. More Fedspeak is in store for Wednesday, with FOMC member Quarles speaking, leading up to the GDP print on Thursday.

Thursday also features US Unemployment Claims and Pending Home Sales. Finally, on Friday, we get the Core PCE Price Index which measures the price of services and goods (ex-food and energy) purchased by consumers. This data release could warrant some attention due to the inflationary pressure that has been present in the markets as of late .

Overall, it will be a moderate economic data release in the US. I always like to know what data will be coming out and when once a trading week begins.

Correlations; traders love them. They tell a story that cannot really be quantified without the raw data. As we have had so much attention going to inflation lately, it is a good time to review the broader market S&P 500 vs. commodities to get an idea of the relationship between them.

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Disclaimer: This content is for informational and analytical purposes only. All essays, research, and information found above represent analyses and opinions of Rafael Zorabedian, and Sunshine ...

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Erikas Ivan 4 weeks ago Member's comment

Great introduction, let's see what the week will bring, thank you!