'now it seems that everyone is starting to like Chinese bonds, 'Mr. Dario said. Chinese bonds have shown incredible stability during the global bond sell-off. Last month, 10-year Chinese Treasury yields fell 3bp, while 10-year Treasury yields rose 39bp over the same period.

Last week, global investors actively sold US bonds to buy Chinese bonds. In Dario's view, this trend is an inevitable experience of paradigm shift, which has occurred countless times in history. At present, US Treasuries account for about 2/3 of the bond portfolio of global central banks and investors, while Chinese bonds account for about 6 per cent. Dario believes that, comparatively speaking, the asset allocation ratio of international investors does not match the economic strength of China and the United States.

"International investors have overallocated US debt because of the status of the US dollar as a global reserve currency, which is the fundamental reason why the United States has been in high debt for decades," Dario said. In the operation of the historical cycle, there is bound to be the rise of competitive economies, followed by the trend of selling US bonds to Chinese bonds in the capital markets. "

Dario also commented that last week's dialogue between China and the United States presented a micro-detail of the new paradigm shift.

Finally, a very important phenomenon now is that central banks are no longer acting in unison. Last week, emerging market countries Turkey, Brazil and Russia all began to raise interest rates in an effort to curb rising inflation. In the developed world, Norway's central bank said it expected to start raising interest rates in the second half of 2021, becoming the first practitioner of the rich world's path to raise interest rates.

In terms of specific reasons, Brazil has to raise interest rates because the prices of agricultural products have risen too much. The price of staple rice has soared by 70%. It has even considered importing food from Venezuela, which is also in short supply. Brazil's central bank announced on March 17th that it would raise its Selic target interest rate by 75bp to 2.75%, the first time Brazil has raised interest rates since 2015. If inflation is not curbed, Brazil will raise interest rates further by 75bp in May.

In Turkey, inflation has been one of the main economic problems the country has dealt with in recent years. As of February this year, Turkey's annualized inflation rate had risen to 15.6 per cent, and the Turkish lira had depreciated by more than 50 per cent against the dollar since the beginning of 2018. Turkey's central bank announced on March 18th that it would raise interest rates by 200 basis points to 19%.

In Russia, GDP accelerated to 2.8% in February after falling 2.2% in January, and the economy continued to shrink. But Russia's central bank announced on the 19th that it would raise its benchmark interest rate by 0.25 percentage point to 4.5%. This is the first time that Russia has raised its benchmark interest rate since the end of 2018. Russia's central bank said the move was aimed at dealing with rapidly rising inflation and stabilizing the country's currency.

In contrast, the Fed just said at its one-interest meeting in March that interest rates would remain unchanged until 2023 and even said it could tolerate real inflation above its established inflation target. The Bank of Japan has relaxed the volatility range of bond yields in order to gain policy flexibility.

The policy disagreement between central banks is a factor that exacerbates currency volatility, and now it is time for international foreign exchange markets to witness higher volatility.