There are two main developments today. The first is the disappointing flash PMI readings from China and the euro zone. The second is a continued rally in European bonds in both absolute terms and relative to Germany. The reduced risk premium in Europe has not coincided with gains in the euro, but to the contrary, the euro has fallen to two week lows and is threatening its 20-day average for the first time in more than three weeks. Ironically, the yen is the big winner. The dollar held below JPY100 again yesterday and failed to even get above JPY99.40 in Asia. In the face of the uptick in the yen, Japanese stocks ... (full story)