The cross classification of moves in interest rates and stocks are always fascinating, always a web, but always changing. In the last several weeks, the bonds are way up, and the stocks are way down. As a foundation for considering these changing webs of who eats whom, and who must even out one's positions, and how they do it, I looked at a 4 by 4 classification of bonds and stocks during the same period ( no forecasting and no lags) with following results over last 2 1/2 years, the times when cronyism has been influencing the food web the most.

Given a big rise in stocks , the concurrent bond moves are evenly distrtributed. For a big decline in stocks, the concurrent bond move was 2.5 times as likely to be a rise as a big decline.

I also note there were an equal number of big rises in stocks as big declines, in a period when stocks roughly declined by 40%. This shows that given that there was a big move in stocks, the big declines were much more severe than the big rises.


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