Remember a few of those NFP days earlier in 2014 when bond markets ended up having a totally counterintuitive reaction?  (If you don't remember, but want to, here's a reminder).  Long story short, at some point in the spring of 2014, the narrative shifted from a plodding Eurozone recovery and plodding move higher in domestic interest rates to focus squarely on a major inflation problem in the Eurozone and massive additional QE.  Given the path of EU inflation, it's not too hard to understand why it became a big deal.

The ramping up of rhetoric regarding new ECB QE certainly had an impact on markets as well.  Eurodollars had been gradually moving higher along with rates in the US, but that all changed on May 8th when Draghi said the ECB was prepared to act at the next meeting.  From there on out, the Euro hasn't really been able to catch a break, and all roads have pointed toward additional QE.

ECB President Draghi was able to railroad the council into levels of policy aggression never thought possible in the Eurozone.  In fact, Germany sued him for the most recent salvo of ABS purchases.  But even if Europe's highest court ultimately determines he acted within his authority, the matter of the ECB investing directly in sovereign governments by buying their sovereign debt remains the highest and most dubious hurdle.

Somehow, roughly half of surveyed dealers and economists see sovereign bond buying coming to the Eurozone in 2015.  Best we know, this would require a change to the European Union treaty, which itself would require German support--something that critics contest will never happen. 

Still, Some European Central Bankers and especially Draghi have been ever more blunt in suggesting QE is on the way.  Each new ECB Announcement Press Conference affords Draghi an opportunity to let that cat out of the bag.  Today's begins at 8:30am.

Why does all this matter to us?  We don't know what it will look like yet, but we can be fairly sure that the success or failure of ECB policy is on a short list of contestants for the next big shift in financial markets.