Once again, we begin with Japan. Speculative accounts' net yen position had spiked in recent weeks. That must have been extremely painful on Friday morning as the yen gave up almost 2%. It will be interesting to see who got caught in this surprise BoJ move.

Source: Investing.com

In the bond markets the 10-year JGB yield falls below 7 basis points this morning, a new record low, ...

... while the 5-year yield moves deeper into negative territory. Will this force JGB investors into "riskier" domestic markets or just send them abroad?

In fact according to JPMorgan (via the Financial Times), the total balance of government bonds with negative yields hit $5.5 trillion after the BOJ action on Friday. Incredible.

Source: @FT

Continuing with the theme of negative bond yields, here are the 5-year French and German yields - both at new lows.

---

Staying with the Eurozone, the recent market jitters are making their way through the area's economy. Loan and money supply growth came in below consensus.

Source: Investing.com

Source: Investing.com

---

To give Draghi even more ammunition for an additional easing move, Spain is still struggling with deflation. Here is a month-over-month and a year-over-year CPI chart.

Source: Investing.com

---

We had some positive news from France where business investment in 2015 rose sharply. Hopefully this can be sustained given all the market uncertainty. 

Source: ‏@ecoeurope, @MarkDeen1 

According to Bloomberg, investor attention has shifted to the Bank of England as the next central bank to ease. The short-term implied vol on GBP/USD options has spiked as traders bet the BoE will respond to the BoJ. This is somewhat surprising, given that while the BoE is clearly concerned about disinflationary pressures, the UK economy remains relatively robust.

Source: @markets 

We've seen some relief for the Swiss National Bank in the currency markets. In spite of the ECB's dovish stance, the Swiss franc has been weakening lately. Some of this was driven by the SNB selling Swiss francs (buying euros), but whatever the case the central bank has been able to stabilize the nation's currency. This is very much needed to keep the country's most severe deflation from worsening.

Source: Investing.com

Switching to emerging markets, hare is the latest.

1. Malaysia continues to be plagued by corruption scandals. Here is one related to the 1MDB sovereign wealth fund.

Source: BBC

As expected, Malaysia's consumer sentiment hit new lows.

2.  The Ukrainian hryvnia is declining again. The nation's central bank is trying to preserve its limited FX reserves, not making dollars available in the market. There is also a delay in the next tranche of the IMF bailout funds ($17.5 bn).

3. S&P has downgraded Azerbaijan's debt to junk. The currency of the oil-dependent nation has been devalued dramatically last year. The chart below shows the US dollar appreciating against Azerbaijan's manat.

Source: Bloomberg.com

4. Colombia's central bank raised the benchmark rate to 6% as it tries to defend the peso and deal with rising inflation.

5. Brazil's budget gap worsened. The recent spike was due to a one-time event, but it was worse than consensus nevertheless. The overall budget deficit jumped to a record BRL 613bn in 2015.

Source: Investing.com

6. Fitch shows a link between the US dollar strength and the deterioration its EM sovereign ratings index. Not surprising.

Source: Fitch

7. China's manufacturing continues to contract. However the Caixin/Markit PMI came a bit better than expected on smaller declines in new orders.

Source: Markit

Related to the above, Iron ore prices seem to have stabilized. Of course we've seen this bounce before - is it different this time?

Source: barchart

---

By the way, while we generally don't post too many links in the Daily Shot, we have two today. One of them is a good overview of the recent GS report on China's capital outflows (thanks Sam).

Back in the United States, here are some trends making news lately.

1. With the global yields continuing to fall (discussed above), here is the 10-year treasury yield.

Source:  ‏@EMgist, @WSJGraphics

2. US employment cost index of wages remains barely above 2% on a year-over-year basis. Those wage pressures we've been promised remain elusive.

3. The Citi economic surprise index has been below zero most of the past year and is moving lower this year.

Source: Yardeni

3. As this next chat shows, the US dollar strength has been a significant drag on US GDP growth. 

Source: @GoldmanSachs, @stlouisfed

4. Related to the above, all eyes are on the US consumer as the last defense against the economic pressure from a strong US dollar. Below are two scenarios from Goldman showing potential outcomes on US output. What if cheaper imports and low energy prices are not enough to boost consumer spending? More on the topic here.

Source: @GoldmanSachs

Turning to equities, the following 3 indicators show a healthy level of skepticism in the market. Contrarian investors should be paying attention.

1. Bull/bear ratio.

Source: Yardeni Research

2. The Tobias Levkovich’s Panic/Euphoria index (a quick overview is below).

Source: Citi

Source: @NickatFP, Citi, h/t @merrillmatter 

3. This is the U Michigan consumer survey on the stock market. Note that this index is on a significant lag.

Source: ‏@boes_ , @umich

Now a few updates on commodity markets.

1. Higher supply projections (and "it's not cold enough for hot chocolate") wipe out last year's cocoa price gains.

Source: barchart

2. Take a look at this pattern in crude oil. Is it different his time?

Source: barchart, @SoberLook

Speaking of crude oil, the US oil rig count drops below 500 for the first time since 2010. Of course these days it's less about rigs and more about wells - but it's a helpful indicator nevertheless.

Source: Investing.com

3. Now let's look at the other type of oil - olive oil that is. Olive oil prices declined sharply in the last few months in spite of lower production. Escaping from deflationary pressures is difficult no matter what your commodity is these days. Sadly, this is hurting Greece who produces quality olive oil. In addition to low market prices, Italian wholesalers are getting their cut buying from Greece (Greece exports a great deal of its olive oil to Italy who puts fancy labels on the bottles and exports it).

Source: index Mundi

 h/t Josh

4. In the gold market, the Comex futures balances spike relative to the amount of physical gold available. It wouldn't take a great deal of capital (relatively) to squeeze this market by forcing the delivery of physical. It's surprising that nobody has done it on a large scale yet.

Source: @sobata416, Zero Hedge

Now we have a couple of updates on the credit markets.

1. The CLO market is under pressure. Banks are telling us there has been no new CLO issuance this year.

2. BDC valuations have declined over the past year roughly in line with the HY bond market.

Source: Ycharts.com

The majority of BDCs now trade far below NAV because the market doesn't trust the valuations. The industry needs aggressive write-downs (particularly of energy positions) to restore market confidence. 

Source: @lcdnews, @MMktDoyenne, @Abbynyhk 

Finally, here are the bottom 20 hedge funds in the HSBC report for 2015 and 2016 (Jan). One high profile fund shows up in both.

Source: HSBC

Source: HSBC

Turning to Food for Thought, we have 5 items this morning:

1.Beginning with politics, what is the betting market telling us about potential VP choices?

Here is the top GOP list: 

Source: @PredictIt_

And this is the Democrats' top list: 

Source: @PredictIt_

2. The economy remains the top issue for US voters. Interestingly, many candidates seem to be focused on immigration and terrorism instead.

Source: @pewresearch, h/t Jake

3. Here is an interesting graphic from the Economist showing the key events faced by the USSR and later Russia - with the oil price overlaid.

Source: @EconBizFin, h/t Jake

4. Which nations face the highest risk of job losses due to automation - a nice graphic from Bloomberg.

Source: @business, h/t Jake

5. iPhone vs. iPad sales. 

Source: @Forbes, h/t Jake