“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.

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