Bond markets lost every bit as much ground as they could lose today without actually violating the recent range.  In terms of 10yr yields, that's 2.57 to 2.66 and 10's are drifting out the door at 2.655 currently.  In terms of Fannie 3.5 MBS, the lower end of the range is near 101-21, and today's low was 101-22.

Of all the crazy things to kick this move off, it looks to have been this morning's CPI data.  That's particularly odd considering the 4+ years of essentially no reaction to all sorts of inflation data.  What gives?

Traditionally (i.e. before the financial crisis and QE years), bond markets (i.e. "rates") were fairly reliable in adjusting based on inflation expectations simply because higher inflation hurt the value of bonds, thus raising rates. Today's reaction in bond markets was to the fact that improving inflation metrics will steel the Fed's resolve when it comes time to finally lift-off from the extended stay at a 0-.25% policy rate window.

Tomorrow brings the important FOMC Announcement where the Fed releases its periodic, official monetary policy stance. That part isn't expected to change much, if at all, but there are other FOMC events to consider. At the same time as the Announcement (2pm), we'll also get the Fed's updated economic projections. These were a major market mover the last time we got them in March. Half an hour later, Fed Chair Yellen conducts a press conference which also had a noticeable effect in March as Yellen candidly referred to a specific time frame for rate hikes.

Bottom line: even though markets are not expecting a major policy shift, the instances of the FOMC Announcement that are accompanied by the forecasts and the press conference ALWAYS stand a chance to move markets.