(Bloomberg) -- The rally in Treasuries ahead of the Federal Reserve’s first interest-rate cut may only just be getting started, according to Bank of America Corp. research.

The 10-year yield has already fallen toward 4% from a 16-year high above 5% reached in October. It could fall nearly two percentage points more, according to the bank’s analysis of prior bond moves between a final Fed rate hike and a first cut.

“The Treasury market has rallied substantially after the last hike in each of the five hiking cycles back to the 1988 cycle,” said strategists including Ralph Axel and Meghan Swiber in a client note. The strategists calculated the biggest drop was 163 basis points, with an average fall of 107 basis points.

With a potential pivot by global central banks from hikes to cuts next year at the top of the agenda for investors, the research is an effort to show the possibilities of where US yields could end up. That would have a spillover effect across global markets.

While the US 10-year rate is down about 90 basis points from its October peak, the strategists noted it still remains above the level in July when the Fed last hiked rates to a range of 5.25% to 5.5%. Taking the yield from then of 3.87%, they estimated it could drop as low as 2.25% by May 2024. That’s when money markets are pricing the first quarter-point cut.

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The second-biggest US bank isn’t betting on its study, however. Its own forecast is for the benchmark yield to end next year at 4.25%, not too far off current levels.

“It is a simple application of historical moves,” the strategists said. They also cautioned that “lingering inflation pressures could limit the rally.”

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