The phrase “at daggers drawn” means: Ready for a fight or at the point of fighting; in a state of open hostilities.
The dagger became a generally accepted part of the gentlemanly costume in the middle of the sixteenth century, and, naturally, with the means of reprisal so conveniently at hand, any insult, suggestion of an insult, or gesture or remark from which an insult might possibly be inferred became an occasion for the drawing of a weapon on the spot or for the more formal challenge to duel.
The original expression was “at daggers drawing,” implying readiness to draw one’s weapon in defense or in maintaining one’s honor.
It is found in the translation (1540) by Jehan Palsgrave, The Comedye of Acolastus, a German story of the Prodigal Son: “We neuer mete togyther, but we be at daggers drawynge.”