How markets push on each other

Four big markets

Money in the world can sit in lots of places. Here are four big ones:

• Stocks: owning businesses.
• Bonds: lending money.
• The US dollar: holding the world's most used currency.
• Gold: a shiny metal people have trusted for thousands of years.

They're connected like kids on a trampoline. When one jumps, the others feel it.

The usual pushes

These are habits, not laws. They often hold, but not always.

1. Rates up, bond prices down. That's the seesaw from the bonds lesson.
2. Rates up, stocks often struggle, especially fast-growing companies with a high P/E.
3. Higher US rates, stronger dollar. Investors all over the world want that better interest, so they buy dollars to buy US bonds.
4. Stronger dollar, weaker gold. Gold is priced in dollars and pays no interest. When the dollar is strong and bonds pay well, gold looks less exciting.
5. Oil and food prices up, inflation up, rates up. Which then pushes on everything above.

Money rotation: brave or scared

Think of a playground. When the sun is out, everyone is on the tallest slide. When storm clouds roll in, everyone runs under the shelter.

• Risk-on: people feel brave. Money flows into stocks, especially small and fast-growing companies, and into riskier things like crypto.
• Risk-off: people feel scared. Money runs to safe havens: US Treasury bonds, gold, the US dollar, and sometimes the Japanese yen.

Money moving from one place to another like this is called rotation. It happens inside the stock market too, between sectors. In scary times, money often moves out of exciting tech companies and into boring ones like power companies and grocery chains, because people still buy food and electricity when times are hard.

A real example: in March 2020, as the virus spread, stocks crashed and money rushed into Treasuries and the dollar. In the scariest weeks even gold dipped for a while, because some people sold everything they could to get cash.

When the habits break

In 2022, stocks fell, and bonds fell too, because interest rates were jumping. Many people expected bonds to cushion them when stocks dropped. That year, they didn't.

And gold climbed to record highs in 2024 and 2025, even while interest rates stayed fairly high. The habits shift depending on what the market fears most. When the big fear is inflation, the pushes look different than when the big fear is a recession.

How traders use this

• A stock trader might glance at bond yields and the dollar before the market opens. If yields are jumping, fast-growing stocks may have a hard day.
• A gold trader keeps an eye on the dollar.
• Rotation shows what the crowd is feeling: brave or scared.

It's a clue, not a signal to trade by itself.

Remember

• Stocks, bonds, the dollar and gold push on each other.
• Usually: rates up, bonds down. Strong dollar, weaker gold.
• Risk-on money goes to stocks. Risk-off money runs to Treasuries, gold and the dollar.
• These are habits, not laws. They break, like in 2022.