Let's start with Japan where the BoJ took the markets by surprise by pushing the benchmark rate into negative territory (taking a lesson from the ECB).

In a stunning move of "competitive devaluation", the BoJ "retaliated" against China's recent currency depreciation and the ECB's threats of further easing. Welcome to currency wars.

The yen weakened sharply in response (shown below is USD rising vs. JPY).

The next chart shows the yen/renminbi exchange rate. That appreciation in recent weeks was not welcome news for the BoJ and Haruhiko Kuroda is now giving it back to the PBoC.

The 10yr Japanese government bond (JGB) yield hit a record low.

Here is a longer-dated 10yr JGB yield chart.

The 5-yr JGB yield went negative for the first time.

  The BoJ of course was fully justified in taking further easing action. In spite of tight labor markets (below), ...

Source: Investing.com

... inflation continues to underwhelm. Here is the Tokyo CPI, which comes out 1 month ahead of Japan's national CPI.

Source: Investing.com

Source: Investing.com

Moreover, industrial production declined and so did household spending.

Source: @business

By the way, this may be an interesting lesson for the Fed. While the labor market in Japan is much tighter than in the US, that hasn't translated into inflation.

Also to put the global situation into perspective, the Fed is now completely isolated in its quest to "normalize" rates. Additional easing is taking place in the Eurozone and now in Japan. The BoE and the BoC both struck a dovish tone. China is likely to ease again and/or allow the RMB to fall further. And the Fed is talking about 4 rate hikes in 2016. Really?

Staying with Asia, here are a few updates.

1. This is South Korea's manufacturing sentiment index.

Source: Investing.com

2. Taiwan enters a recession as the GDP shrinks for a second quarter.

  3. The Indian rupee is at 68 to the dollar. Given this steady weakening of the currency, another uptick in inflation is now quite possible. India needs a rate cut given the recent slowdown, but this currency trend makes that impossible.

Source: Investing.com

4. China continues to struggle with capital outflows.

Source:  ‏@EMgist, @WSJGraphics

Source:  @business 

Chinese residents find multiple ways to move capital out of the country (including activity such as buying expensive domain names).

Source: GS, h/t Josh

This may sound a bit harsh, but as long as the right palm is greased, capital controls can be quite "porous".

Source: BAML, h/t Josh

Now on to the Eurozone where we see early signs of market jitters spilling into the economy as the sentiment index comes in below expectations.

Source: Investing.com

The German CPI remains steady in spite of weaker energy prices. Draghi wants to push it much higher.

Source: Investing.com

Greek business confidence recovers after last summer's shock.

  Back in the United States the futures markets are pricing a 42% chance of no rate hikes in 2016 ("one-and-done").

Source: CME

Here is what this distribution looked like 2 weeks ago - a dramatic shift in sentiment.

Source: CME

Indeed, we see this shift in rate expectations showing up in short-term treasury yields as the 2yr treasury yield drops below 80bp. Once again, where is that treasury selloff we've been promised?

Source: Investing.com

By the way, the "one and done" scenario increasingly looks similar to 1997 when the Fed stopped at one hike due to the Asian Crisis. At the time the FOMC had similar language to the latest statement.

Source: @ScottFarnham

In the credit markets we see a huge wave of corporate credit downgrades coming in the next couple of years.

Source: Barclays. h/t Josh

The US housing market is gradually healing as seen in the following two metrics.

Source: @DavidSchawel, h/t Josh

US durable goods report was a massive disappointment. The headline number was down 5.1% on the month. Excluding defense/aircraft orders the year-over-year decline is the worst since 2009.

  Of course many argue that the industrial weakness is not going to be detrimental to the US economy because manufacturing is such a small component of economic activity.

Source: @NickTimiraos, WSJ

Switching to commodities, here are a few trends to consider.

1. Some may remember this story from back in December: hedge funds are piling into sugar.

Source: Bloomberg.com

Well, the pain of the crowded trade unwind continues.

Source: barchart

2. Orange juice futures had a spectacular 7% one-day pop. The Duke brothers would be proud.

Source: barchart

  3. Crude oil is up some 23% from the lows - that's quite a bounce. Remember the "bounce" discussion a few days ago?

Source: barchart

In the equity markets the volatility in tech names continues as Amazon misses forecasts (in spite of record earnings).

Source: Google

Short interest as a percentage of the float is the highest in 3 years.

Source: @business, h/t Jake

In the private markets, equity exits via strategic acquisitions had increased significantly in 2015 (vs. 2014). It will be interesting to see what happens in 2016 as valuations return to less "exuberant" levels.

Source: @PitchBook

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

1. Starting with US presidential elections, the betting markets now have Trump ahead of Cruz in Iowa.

Source: @business

2. Japan's estimates of birth rates have been consistently too optimistic.

Source: @MktOutperform 

3. New York State Attorney Eric Schneiderman says US sales of concert tickets are a rigged game.

h/t Jake

Source: @business, h/t Jake

4. Have movies been getting progressively worse?

Source: @Slate, h/t Jake

5. Democrats are more likely to watch the opposition's debates, while Republicans are more likely to watch their own.