“If history is a guide, a backup in Treasury yields could be both swift and violent, with most of the move occurring over a short period of time, generally within two months,” said LaVorgna and Ryan. “If anything, the IMF’s warnings might be too conservative.”

Now there’s always 2004. That’s when the Fed began its last cycle of rate increases, yet the 10-year yield was flat over the course of the year. Still, that may be down to the Fed’s pledge to act “at a pace that is likely to be measured.” Officials now say they won’t mimic that approach.

All the more reason to worry is that markets are low on liquidity and that investors don’t seem to be on the same hymn sheet as the Fed. According to the so-called dot plot, the median projection among Fed officials is that the federal funds rate will be 1.875 percent by the end of 2016.

“If the Fed raises rates later this year, and it causes a re-evaluation of the projected path of monetary policy, then history could repeat with the 10-year Treasury yield shooting substantially higher,” said LaVorgna and Ryan. “Monetary policy makers have told us that they anticipate a gradual normalization of interest rates, but the reality is that they do not know.”

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