Japan

A powerful earthquake, with a preliminary magnitude of M7.3 on the Richter scale, since reduced to M6.9  by the USGS, struck Japan 156 miles northeast of Tokyo at 5:59am local time.

The epicenter of the earthquake, which was felt in Tokyo, was off the coast of Fukushima prefecture at a depth of about 10 km, Japan's Meteorological Agency said, the same Fukushima that was site of the 2011 natural disaster and tsunami that resulted in the worst nuclear power plant disaster since Chernobyl.

With the Trumpflation euphoria easing back slightly overnight, leading to a modest paring in the USD index and US Treasury yields, Asian and European stocks rose, while US equity futures rebounded to just shy of new all time highs, as crude jumped on renewed optimism that OPEC will agree to cut output; Italian equities underperformed ahead of the Italian referendum; metals rebounded from last week’s losses as yields dropped and the dollar halted its longest winning streak versus the euro.

Following Trump's first official meeting with a foreign leader on Thursday night (one which took place in Trump's apartment at the Trump Tower), Japanese Prime Minister Shinzo Abe said Trump was a trustworthy leader in comments after his first meeting with the U.S. President-elect, whose statements on trade and security have sparked concern in Japan. Abe told reporters that he had frank discussions in a “warm atmosphere” at Trump Tower, and said he explained his views on a range of issues, but declined to comment on the substance of the talks in a meeting that lasted more than an hour.

Just when you thought a small silver-lining was appearing in Japan (well no one did really) as Q1 GDP was revised marginally higher, Q2 is off to a disastrous start as Machinery Orders crashed 11% MoM in April (worse than the worst expectation) and the biggest drop since May 2014. Year-over-year that is an 8.2% collapse (a 3 standard deviation miss from expectations of a 1.8% drop) with a more modest 3% slide in Services offset by a 14.8% YoY plunge in manufacturing.

Ever since the launch of Japan's QE, and worsening in the aftermath of January's shocking NIRP announcement, Japan's bond market, which moments ago slid to new record lows yields across the curve, has had its share of near-death experiences: between repeated VaR shocks, to days in which not a single bond was traded, to trillions in bonds with negative yields, it has seemed that the Japanese Government Bond is on life support. That support may be ending.