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Can I take this to mean you don't know the answer? Just asking...

Not at all.


Could you please explain it then? I am asking nicely. I am quite mathematically adept, so don't worry about that. I just need to know the concept of what the graph is illustrating (if its not really bond price), and a quick summary of how that would turn into yield.


Given that statistically the markets remain in-trend about 70% of the time... your understanding would be correct. The trend itself is a trail in time. The fact that we know that the trail TENDS to remain un-redirected about 70% of the time provides us with forecastability by deduction.

...

Yes, there have been quite extensive studies on this, and if you do a little digging you'll find extensive market statistics in this area.


Funny, cause I've read studies that say that the correlation between the last change and the new change borders on irrelevant, basically 50%.

Here's one such study I just found:
http://www.financialplanauditors.com/ruminations/DoMarketsTrend.pdf

It says that a positive year in the market is followed by another positive one 74% of the time. But that a negative year is followed by a positive one 70% of the time. There is no statistically meaningful difference there.

I have found several more summaries of studies that conclude the same thing, but they do not provide hard numbers - and typically require pay or purchase of a book to see more.

Anyway, you claim the studies justifying trends are all around, so provide a few.

And finally, I note that despite the "trend", bankrate says mortgage rates are up 3 beeps in the last week. Anecdotal I realize, but there ya have it.
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