Summary

• The Bank of Japan raised its overnight target rate to 1% last week. It did not prevent the yen from extending its slide to a new low since July 2024.
• The euro also is the most correlated with the S&P 500 in more than a decade, near 0.75 earlier this month but has eased to a little more than 0.60.
• Without signals from the central bank, Chinese banks will likely keep the loan prime rates steady at 3.0% and 3.50% for one- and five-year loans, respectively.
• Sterling remains not only inversely correlated with US two-year rates but is also inversely correlated with changes in the two-year Gilt yield (30-day correlation is around -0.30 and the 60-day correlation is about -0.40).
• Since the Canadian dollar's slide began at the start of last month, it has fallen by about 4.15% and is the worst-performing G10 currency.

Last week was momentous. There was a fragile 60-day de-escalation during negotiations between Washington and Tehran. However, the allies of both (Hezbollah and Israel) continue to clash, stalling talks. Still, oil prices tumbled 7-9%. At the same time, a new era at the Federal