Just as we warned was likely (how many times have we seen this game played), The ECB has come out this morning to explain to the market that the reaction to Draghi's hawkish speech yesterday was entirely mistaken. The reaction is clear - EUR and Bund yields are tumbling.

Vice President Vitor Constancio scrambled to set the record straight, saying the remarks were “totally” in line with existing policy and the response by investors was hard to understand.

Following the euro’s biggest daily jump in over a year, in what could be interpreted as verbal intervention, ECB’s Constancio said that market reactions aren’t always understandable and that Draghi didn’t say anything new in regards to recent ECB policy. Mario Draghi’s speech in Sintra on Tuesday was “totally” in line with recent ECB policy, ECB Vice President Vitor Constancio said in an interview on CNBC.

Never a good thing though when you're the Master of Communication but you need to explain your speech twice. — Frederik Ducrozet (@fwred) June 28, 2017

And the reaction is clear...

And Bund yields are down 5bps already...

It is very clear now that The ECB is terrified of a new bond tantrum... just as we noted earlier when previewing Draghi's parting statement at Sintra.

Global Bonds Sell Off, Sparking Fears of Further ‘Taper Tantrum’ https://t.co/rJjIAlVtbJ



Don't worry, Draghi will be dovish in 90 minutes — zerohedge (@zerohedge) June 28, 2017

As The Wall Street Journal reports, investors were rattled on Tuesday when ECB President Mario Draghi talked of a “strengthening and broadening recovery” in the eurozone’s economy.

Analysts are now weighing whether these moves will turn into a full-scale “taper tantrum” or whether investors’ continued hunger for fixed-income assets will temper any wider selloff. "Yesterday was the first explicit sign that [the ECB will] be looking to remove some of the stimulus,” said Mike Bell, global market strategist at J.P. Morgan Asset Management. “Clearly not everybody was expecting that.” "I don’t think his speech was a big surprise, but you saw the market reaction,” said Joachim Fels, global economic adviser at Pacific Investment Management Co., who attended the forum. “It’s a warning sign that there are some unintended consequences as central banks head toward the exit.”

Well clearly The ECB doesn't want that - and so they jawboned back everything Draghi said yesterday!

To summarize: