The Fed and the ECB are closing in on the end of their respective tightening cycles, with an ECB pause still somewhat further away due to stickier core inflation and wage developments in the Eurozone. Looking ahead, we see greater potential for an inflation pullback in the US compared to Europe, which also suggests the Fed will likely move earlier to cut policy rates when the recession finally hits.

The BoJ on the other hand has only just started its tightening cycle, with the countdown to further yield-curve-control changes now really on as Japan finally seems to be exiting its deflation and zero-wage-growth regime of the past decades.

Meanwhile, in China, the PBoC continues its easing bias via RRR cuts as price pressures remain subdued in the economy, implying the countdown to a first policy rate hike will last longer than markets think.

Global bond yields have moved lower again after the sell-off in February, as tighter bank lending conditions are seen to have trimmed the need for further policy tightening. We believe a further retreat in yields beckons as the final countdown approaches to a pause in key central bank hiking cycles.