The Fed is at 4.00%, the ECB at 2.50%, and the BOJ at 1.25%—the highest level for Japan in nearly three decades.

The key factor is the synchronization.

In 2024 and 2025, the three were either cutting rates or holding steady.

Now they are tightening in unison, removing the safety valve that had always existed: with no major central bank maintaining loose policy, there is no source for cheap capital.

Coordinated tightening differs from isolated tightening.

This is the backdrop sustaining high long-term interest rates and elevated risk premiums across all assets dependent on liquidity.