The Federal Reserve continues to taper its bond-buying program as the official unemployment rate ticks down. That should mean higher interest rates.
But lots of other things are happening. For example, though the unemployment rate is at 6.3 percent, the labor participation rate is the worst it has been in over three decades. Tensions on the Ukraine-Russia border and data showing China's manufacturing contracting have sent investors fleeing to the safety of U.S. bonds. That should mean lower interest rates.
This tug-of-war in the bond market has kept rates in a relatively tight range for much of the year. In fact, the yield on the benchmark U.S. 10-Year Treasury Note has stayed between 2.6 and 2.8 percent since February. It wasn't long ago when a 20 basis-point move was just another humdrum week in the market.
While the 10-Year's yield dipped below 2.6 percent briefly in the past couple of days, Chantico Global founder Gina Sanchez said, investors shouldn't expect rates to stay this low indefinitely.
"I don't think that we can really support going well below 2.6 percent," said Sanchez, "only because bonds at these levels are really expensive."
The only way for interest rates to go lower would be for economic expectations to sour, according to Sanchez, a CNBC contributor.
"That's really not what's happening," Sanchez said. "Although it's not a dramatic recovery, it is still a recovery. We are still seeing a fall in unemployment rates. There are still issues out there but we are actually seeing the consumer come back to life. So, I think that it doesn't make any sense to have rates down below here. I think that this is an anomaly and it's a selling opportunity."
However, Richard Ross, global technical strategist at Auerbach Grayson, says interest rates will be moving lower.
Ross notes the 10-Year has been trading as a "range within a range." While it has stayed roughly between 2.6 and 2.8 for the past three months, the larger range has been between 2.5 and 3.0 percent over the course of nearly a year. Ross' short-term chart of the 10-Year Treasury shows resistance at a yield around 2.72 percent, its 200-day moving average.
But on a longer-term chart, Ross sees rates as having made a "bearish double top" and headed down to test its 200-week moving average. "That comes in at around 2.40" percent, said Ross. "I am bearish on equities … and I think that plays right into bullish play on bonds, meaning prices go higher, rates move lower. Look for a test of that 2.40 [percent] to coincide with a bigger pullback in the equity market."
To see the full discussion on the 10-Year Treasury Note, with Sanchez on the fundamentals and Ross on the technicals, watch the above video.