Today began in hilarious and somewhat glorious fashion with unnamed "ECB sources" overtly doing damage control on Draghi's comments that rocked bond markets yesterday.  The "sources" said Draghi's comments were merely intended to prepare markets for a decision on stimulus later this year without making a firm commitment.  

Well guess what, "sources!"  We have a bit of experience with "preparing markets for decreased stimulus" here in the US.  The Fed crossed this same bridge in May 2013 (Bernanke actually tried to cross it in March 2013, as I discussed in way too much detail here) and there was really no way around the fact that it was going to cause markets to freak out.  

We and the ECB are very lucky that the Fed paved the way for these growing pains.  Otherwise, the past 2 days would have been much uglier.  Because of the Fed's tapering saga, bond market participants know it's only a matter of time before the ECB is standing before a similar fork in the road.  Sounds like they think that fork is coming up fairly soon.  That's a bigger deal for Europe than it is for US, but US rates are still going to feel it. 

The biggest saving grace so far has been the extra degree of separation between MBS and European rates.  In other words, Treasuries are the first domestic line of defense when it comes to the effects of European bond market volatility.