Nikkei 225

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.

It has been more of the same this morning as the dollar extended its advance on the still undeteremined Trump reflationary policy measures after Yellen signaled an interest-rate hike could be imminent, while bond yields around the globe rose again, metals declined,  European stocks advanced and futures were modestly in the red just shy of all time highs.

In an overnight session dominated by the latest political developments out of the US where Hillary Clinton officially claimed the democratic nomination, the financial newsflow focused on China's trade data, where exports fell 4.1% from a year earlier, in line with expectations, but imports dropped 0.4% from a year earlier, the smallest decline since they turned negative in November 2014, likely reflecting higher commodities prices but really driven by "imports" from Hong Kong which rose to $2.48b, the highest since at least 1999; and a 243% y/y surge in dollar term, also a historical high.

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.

Stock whisperer Yellen said all the right things yesterday, when she sounded more optimistic than pessimistic on the economy but while the economy is "strong" it is most likely not strong enough to weather a rate hike in the immediate future.