Editing Sector rotation (section)

== Connection with other markets ==

The primary driver of sector rotation is the variability of [[currency]] values (inflationary, disinflationary, or deflationary) and interest rates.  As the economy expands, demand for raw materials creates inflationary pressures, which in turn prompt higher interest rates, which increase the value of the currency, which reduces the competitiveness of a country's exports as the currency causes them to cost more to other countries.  This final stage causes the economy to contract, reducing demand for raw materials, which creates deflationary pressures, which in turn prompt lower interest rates, which decrease the value of the currency, which increases the competitiveness of a country's exports—creating a new market cycle.  The relative strength of commodities, bonds, currencies, and stocks shift in this changing monetary climate in a somewhat predictable manner.<ref>John Murphy, Intermarket Analysis, pp. 183-184.</ref>