Bank of America: Global bond markets show unusually converging trends, reasons unclear but presenting profit opportunities.

The interest rate strategist at Bank of America said that the trends in the government bond markets of major economies around the world are surprisingly similar, for reasons that are still difficult to explain. However, investors may be able to profit from this. The global interest rate research team led by Ralf Preusser pointed out in their report that the yield curves of the bond markets of a group of ten countries, including the United States, the eurozone, the United Kingdom, Japan, Australia, and Canada, are showing a "clear convergence trend", even though the "pricing of these markets still reflects significant differentiation in monetary policy cycles". Specifically, the market expects the Fed and the Bank of England to cut interest rates, the Bank of Japan to raise rates, and other major central banks to remain on hold. However, the report stated that the standard deviation of the slopes of the yield curves of these six markets has fallen to its lowest level on record, decreasing more than the volatility of interest rates, contradicting the trends in term premia in each market. Although volatility indicators have fallen significantly, they are still "far higher than pre-hiking cycle levels, while global yield curves are now more convergent than they were back then."