Citigroup strategists say interest rate volatility is putting pressure on risk assets.

Citigroup strategists said that as interest-rate volatility rises, the impact of the bond selloff on the stock market has become more dangerous. The team led by Dirk Willer maintained exposure to equities but warned that the equal-weighted S&P 500 faces risks. They noted that the MOVE Index rising more than 2 standard deviations over a one-year lookback period is flashing a yellow flag for the stock market. However, they also said that spikes in the MOVE Index are usually short-lived, and that once the pace of the Federal Reserve's rate-hike cycle becomes clearer, volatility tends to fade.