This may be the first time in the history of the MBS Commentary that Canada has made an appearance as a relevant market mover--let alone a headline appearance.  It wasn't until I saw the chart below that I really believed what I was reading and seeing.  It shows 10yr Treasury yields in yellow and the yield curve in green (I used 10yr vs 3yr yields because 3's move more than 2's, but both speak to what's going on in the short end of the curve).

For those who'd appreciate the refresher, when we're talking about "the curve," it's really just a fancy way of talking about how close together are longer term and shorter term yields.  A lot of Treasury trading is done on a curve basis as opposed to outright.  In other words, a trader would bet on 10's falling vs 3's as opposed to 10's simply falling.  In that instance, 10's could rise, and as long as 3's were rising more, the trade makes money.

If the chart doesn't make it clear (and it could be confusing, to be sure), here's what's happening:

1. The ECB leak hits at 930am and bonds respond with volatility, but actually strengthen by 10am.

2. The BoC news hits at 10am and the 10yr rally subsides, but doesn't break back above previous highs.  This made for a false sense of security as it looked like 10's were continuing to calm down into 11am.

3. But during the 10am-11am hour, the yield curve had been ripping higher/steeper.  Now remember that stuff about traders trading the curve?  Curve positions can hit snowball-like triggers just like outright technical levels.  The real snowball today was in the curve trade.  We had implied weakness there sooner and more consistently than in 10yr yields themselves. 

All of that is important because the curve trade was a response to the Bank of Canada surprise rate cut.  So yes...  you really can blame Canada for today's bond market sell-off. 

Tomorrow is a new day, and it's good to remember that today's ECB leak may turn out to have been a simple proposal that was discussed.  While it's still highly likely that the ECB takes this opportunity to announce QE, it might look completely different from today's leak.  Even if the amount of money and time frame are similar, there are sure to be plenty of ancillary features not discussed in the leak.  For bond markets, tomorrow will be all about digesting that full meal deal.