When the Bank of England unexpectedly last week Keep interest rates unchanged, The impact quickly spread beyond the British government bonds.

Subsequent Rebounded in the Phnom Penh market, As traders lifted their bets on UK interest rate hikes, the yields on Eurozone bonds and U.S. Treasury bonds also fell sharply.

This episode highlights some of the smaller central banks—most notably the Bank of England, but also the Bank of Canada and the Reserve Bank of Australia—recently finding themselves in an unusual position. Determine the trend of the world’s largest bond market.

Rabobank interest rate strategist Richard McGuire said: “We have seen many times now that these central banks, which are usually on the fringes of the global market, are already in a dominant position.” “It must be the tail wagging the dog.”

Some investors attribute this unusual pattern to Fed’s steady telegram declines Reduce asset purchases or the consistent dovish attitude of the European Central Bank, and a series of sharp handbrakes by smaller central banks.

The Bank of England has always been the protagonist, when it first hinted at me in SeptemberInterest rates may rise this year, Policymakers issued a series of public comments that further inspired expectations for rapid policy tightening, and then broke those expectations by keeping interest rates unchanged last week. Last month, the Bank of Australia caused its own sensation by allowing bond yields to exceed its long-term holding target, while the Bank of Canada made waves by abruptly abandoning its bond purchase plan.

Even so, the spectacle of these relative central bankers giving orders has caused some people’s headaches.As an American portfolio manager said: “The Bank of England did not raise interest rates… It sounds strange, but it is a big catalyst [for the rally in Treasuries]. I didn’t mean to offend when I said “strange” to our British friends. But man, you are not that important. Why do you want to promote our market? “

Part of the answer lies in the common challenge faced by central bankers around the world: how to deal with rapidly soaring inflation without overreacting in a way that stifles economic recovery. Given that monetary policies in developed countries have generally kept pace over the years, observers at the Federal Reserve and the European Central Bank are seeking clues from the smaller and often more flexible central banks to understand how the big beasts will respond to difficulties.

Fidelity International Investment Director Andrea Iannelli (Andrea Iannelli) said: “The central banks have been synchronized for a long time, so that people can not imagine anything else.” “Anyone who is not aligned will not be regarded as Alien, but the canary in the coal mine.”

Iannelli believes that this “mutual interpretation” from the Bank of England to other central banks is intensified to some extent by the positioning of investors. This is because investors caught off guard by the actions of the United Kingdom used U.S. Treasury bonds as a proxy for British Treasury bonds when they were eager to exit loss-making positions. He said: “In the Phnom Penh bond market, you may not be able to do this at the scale you need, so you buy treasury bonds, buy treasury bonds, buy anything you can buy.”

The global nature of the government bond market, investors regularly evaluate the yields of different economies, which also means that fluctuations in one market will often jump into another market.

“If interest rates in other countries will be higher, and some of these global investors can stay in the country and make money, it will be important [the US] Markets,” said Tom Graff, head of fixed income at Brown Consulting.

However, the role of investor positioning or relative value is limited by the mismatch between the size of the relevant economy and the bond market. International Monetary Fund data shows that the UK’s outstanding government bonds are slightly less than 2 trillion pounds, and the value of the UK government bond market is only slightly higher than one-tenth of the value of the government bond market. The bond markets in Australia and Canada are much smaller.

Rather, it is the clues provided by these market changes as to the next steps that large central banks, mainly the Fed, may take that give them immense importance.

“The interest rate market is driven by global monetary policy communication,” said Mark Cabana, head of U.S. interest rate strategy at Bank of America. “In particular, the Bank of England has had a significant impact on the US interest rate market, because the factors that drive inflation are global to some extent. If the central bank strikes back, it will have a global impact.”

At present, this means that the twists and turns of the monetary policies of the United Kingdom, Canada and Australia may be subject to unusual scrutiny. Seema Shah, an investment strategist based in London for US asset management company Principal Global Investors, said that she recently received a series of calls from her American colleagues.

“People suddenly want to understand the response function of the Bank of England,” she said. “But there is still this potential suspicion. It is difficult for them to admit that it can all start with the Bank of England.”