Developed economies are on increasingly divergent paths. So why do stock markets behave as if they are one big trade?
 
The U.S. economy seems to be reaching firmer ground, with a pickup in hiring reducing unemployment to the point where the Federal Reserve is looking to raise rates next year. Not so in Europe, where unemployment remains high and worries about vanishing inflation are pushing the European Central Bank to consider more stimulus measures. Meanwhile, in Japan, the jobs market is finally improving, but with inflation stuck around 1% the Bank of Japan's foot will remain firmly on the accelerator.
 
Those differences have yet to register in stocks, where monthly returns from one market to the next have tended to be very similar. The standard deviation of monthly returns measures how far these differ between markets. Among 10 major developed markets tracked by MSCI, the 12-month moving average of the standard deviation has fallen to its lowest levels since early 2008—just before the financial crisis.
 
MSCI's global sector indexes show a similar trend. And a weighted measure calculated by S&P Dow Jones Indices shows that within the S&P 500, dispersion between individual stocks' monthly returns are close to multidecade lows.
 
One reason for this, points out S&P Dow Jones Indices index investment strategist Tim Edwards, involves low levels of volatility in stocks globally. This has created an environment in which fundamental differences across markets, sectors and individual stocks have been masked. Moreover, as with low volatility, there seems to be a tendency for low levels of dispersion to beget low levels of dispersion.
 
Underlying both the low levels of dispersion and volatility are extraordinarily low interest rates around the world. These are a function of both low inflation and the easy-money policies central banks have put in place. Investors who might otherwise keep the bulk of their money in investment-grade bonds have been into stocks and other risky assets. And as they have done that, they may have paid too little attention to what makes one stock, or stock market, different from another one.
 
Those structural pressures squeezing markets won't shift quickly. After all, even after the modest tightening expected over the next year from the Federal Reserve, as well as the Bank of England, monetary policy around the world will remain very loose. With little danger that the flow of liquidity from central banks might be stanched, a bet on stocks pulling away from one another could be premature.
 
But a one-track mind is a dangerous trait for investors. Look away from stocks and other markets indicate that views on where the world is headed are changing.
 
The dollar has staged a major rally against its major counterparts, rising to its highest level on trade-weighted basis since early 2009. But while back then it was benefiting from a crisis-inspired flight-to-quality trade, now it is strengthening on a view that the U.S. economy will offer much better returns on investment in the years ahead than most other developed economies.
 
Meanwhile, fixed-income investors, reckoning that the stronger economy will bring tighter policy from the Fed, have been rethinking the easy lending terms they have been offering to risky companies. As a result, yields on sub-investment grade bonds have climbed to their widest levels in nearly a year, while yields on investment-grade debt are only marginally wider.
 
What makes both stocks and stock markets around the world fundamentally different from one another may be about to fundamentally matter.