Bond bid drags down the US dollar

There has been a major bid in global bonds since the ECB press conference wrapped up.

The suspect market is looking at the ECB's new Transmission Protection Instrument and think that it's boxed itself into buying periphery bonds in large quantities. Yes, there's plenty of flexibilty there but politically, the ECB is going to need to close spreads. Or at least it's more likely to buy than it was before.

So let's say you're Ray Dalio and short Italian bonds. Do you really want to face off against the ECB? Or would now be the time to cover?

Moreover, the 50 bps ECB hike shows the commitment of global central bankers to fight inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term, even in the face of mounting economic risks -- particularly in Europe.

German and Italian bonds started the move but now it's global. US 20-year yields are down 11 bps to 2.92% from a high of 3.08%.

In turn, the pressure is ramping up on USD/JPY, which is now down 50 bps on the day to 137.76. It's been a relatively quick decline.