It's been a busy morning for bond markets, with lots of economic data as well as the European Central Bank Announcement and Press Conference.  Several geopolitical headlines also vied for attention during the busiest moments.

Things are calming down now though bond markets remain near their weakest levels of the day.  Once again, Treasuries have gotten the worst of it--largely because they got the best of it on the way to lower rates.  Here's a play by play extracted from one of the morning updates on the MBS Live dashboard:

• ECB surprises markets with another small rate cut at 7:45am.  European bond markets rally, but Treasuries barely budge by comparison.
• At 8:15am, ADP Employment came out slightly weaker than expected.  This time, Treasuries/MBS rally while European bond markets barely budge.
• 8:30 brings some US data which is inconsequential to the bigger picture, and the start of ECB President Draghi's press conference.  From the best levels of the day at 8:30am, bond markets generally moved weaker throughout the press conference.

It's interesting that bonds weakened despite the announcement of SOME asset purchases by the ECB, but it's that "SOME" that's the problem.  In discussing today's asset purchases, Draghi's comments were more interesting for what they left out: any legitimate or imminent plan to conduct true QE.  He says it was discussed, but all that's happening for now is the purchases of NON-FINANCIAL assets.  That means no sovereign debt, and it also means a limited pool of loans to the private sector. 

Draghi drove this disappointing point home by characterizing the ABS purchases as an enhancement to the ECB's existing refinance operations. Long story short, the hype and the morning's rate cut got hopes up for something more, and the reality was a bit underwhelming.  Markets see Europe going through the same QE growing pains as the US. 

When markets wonder why today's announcement seemed constrained and limited, they think about things like this.  Then they think about things that really freak them out, like "what if this is finally where European bond markets bottom out? 

The more positive way to look at this from an economic standpoint is that markets are breathing a sigh of relief about inflation hopefully taking hold in the EU.  But I don't see today's announcement as accomplishing that, and I think we'd see bigger movement in equities markets if that was the case.  I think this is all about the let-down and realization that pulling off true QE continues to be extremely difficult for Mario, and what he's ultimately able to pull off may not quite cut it.  He would have been better off to announce nothing today and work toward a bigger barrage for the October meeting.

If we only had two words to react to this ECB asset purchase announcement, there are none better than: "that's it?"