VIX ETFs Gain Momentum on Fears of Bigger Market Retreat

“I’m calling it the financial game of chicken. Who moves first? If the bond market keeps moving like this, the stock market cannot ignore it,” Nomura fixed-income strategist George Goncalves, told CNBC. “If it keeps nudging rates, ultimately there’s going to be a competition between stocks and bonds. Among the things that could stop this sell-off [in bonds]are either an equity market correction or value investors come in and the [Treasury] auctions are good next week.”

The higher yields are already causing unrest in riskier equity assets, with some observers arguing that the recent volatility could signal a pullback that could take stocks several percent lower before bargain hunters jump back in.

“We’re definitely at more risk in the last three days. We’re seeing wild fluctuations, volatility. … If you look at the 10-year interest rates, it looks like they’re going higher. Then we’re getting concerns of inflation, gold is strengthening up. … I think what you’re seeing is overall interest rate concerns.” Paul LaRosa, chief technician at Maxim Group, told CNBC, projecting that the 10-year chart looks like yields could move as high as 3.25 percent by year end.

For more information on the CBOE Volatility Index, visit our VIX category.