That will depend on the continuation of flows from yesterday, adding to the mix ahead of the FOMC meeting minutes release as well as the US non-farm payrolls release on Friday.
The wedge pattern certainly indicates that eventually, something’s gotta give.
And if yields are to break to the topside, that will make things even more interesting to start the new year.
In turn, that will provide a stronger impetus for USD/JPY to stick with the breakout highlighted earlier here. As much as higher yields may pose a problem for stocks, I don’t see much of that unless we start to go beyond the March 2021 highs above 1.75%. Even so, one can argue that only a move closer towards 2% may be significant in pulling down equities sentiment.
Otherwise, if the move does not extend too far, too fast, then stocks may breathe a little easier.
As for the bond market outlook and why yields are looking to trend higher, I talked about that more in-depth here: What next for the bond market in 2022?