Last week in bond markets, the largest foreign holder of US treasuries witnessed its currency hit 40-year lows, while a weaker-than-expected US jobs June payroll report pushed out expectations for the next fully priced Federal Reserve rate hike from October to December. In Canada, stronger-than-expected April gross domestic product (GDP), a measure of economic activity, put the second quarter on track for positive annualized growth—easing investors’ technical recession fears and further reducing the probability for the Bank of Canada (BoC) to cut rates. Despite all this, interest rates in Canada closed the week relatively unchanged at the shorter end of the yield curve. Lastly, a major private credit firm capped outsized quarterly redemptions to 5%. 

The Japanese yen fell to its lowest level since 1986 against the US dollar, primarily driven by concerns over higher fiscal spending plans, an uncertain economic outlook, and lower relative interest rates versus the US and other major economies—where the Bank of Japan (BoJ)  recently hiked its benchmark rate by 25 basis points to 1% last month. Notably, Japan is the largest foreign holder of US Treasury bonds, with roughly US$1.2 trillion in holdings according to the US Department of Treasury’s April month-end data. Investors predict a weakening yen may prompt Japan to sell a portion of these US assets to support yen-buying intervention operations, potentially pressuring US yields higher. This may already be evidenced by the stark US$77.1 billion decline in Japanese foreign exchange reserves in May 2026, according to Bloomberg data.

Blue Owl Capital capped quarterly withdrawals at 5% for two of its private credit funds, following outsized second quarter redemption requests. These caps are essential for preventing the disorderly liquidation of private assets and protecting long-term fund objectives. According to Bloomberg, investors sought to withdraw roughly 18.8% from Blue Owl’s US$36 billion Credit Income Corp fund (OCIC) and 38.1% from its technology-focused income fund (OTIC), a decline from the 21.9% and 40.7% witnessed in the prior quarter, respectively. Blue Owl equity shares (OWL) rose in response to the news, as the redemption requests represented a deceleration from the prior quarter—despite still far exceeding the 5% withdrawal caps. This decision comes amidst persistent private credit industry concerns regarding lending standards, valuation transparency, and rising redemption pressures across private fund peers. Ultimately, while these funds offer an illiquidity premium through higher potential returns, they are often misunderstood by investors who may not fully appreciate the inherent realities of private assets, such as strict capital lock-up periods and challenges accessing capital in a timely manner.