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Wall Street is getting this trade completely wrong

The yield on the benchmark 10-year U.S. Treasury note is already far lower than those Wall Street had predicted. But according to a bold new call, it could fall even lower.

Economist Komal Sri-Kumar, president of Sri-Kumar Global Strategies and senior fellow at the Milken Institute, predicted on CNBC that the 10-year yield would fall below 2 percent in the next six months. Currently, that key rate is below 2.5 percent—down sharply on the year, despite all predictions to the contrary. In fact, the consensus estimate in December was for the 10-year yield to rise to 3.2 percent in June, according to a Wall Street Journal poll of economists.

Gina Sanchez, founder of Chantico Global, says only two extraordinary events could cause rates to drop under 2 percent: an all-out war overseas, or an even-weaker-than-expected recovery in the United States.

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"You have to have a pretty bearish view on this recovery" to think rates would go that low, said Sanchez, a CNBC contributor. "Although [the recovery] has been quite weak–and it's been a concern of mine–it is still a recovery. We are still seeing slow improvements."

But according to Ari Wald, head of technical analysis at Oppenheimer & Co., rates will head lower for two reasons: the yield's technicals are continuing to trend downward, and bond bullishness has yet to reach its peak (bond yields move in the opposite direction of bond prices).

"The trend is lower," said Wald. "The 10-year moved below the 200-day moving average in April. Since then, we've been making lower lows and lower highs…. I think we move below 2.4 percent here. I don't know if I could make the case for below 2 percent, but maybe somewhere at 2.1 to 2.2 percent is a support zone that I'm looking at."

Wald also said that, according to the latest survey from the firm Consensus, 63 percent of market participants questioned are bullish on bonds. That's a greater amount of bullishness than there was at the start of 2014, but not as much as was recorded in 2012 as the 10-year yield hit an all-time low.

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"This is much higher than it was coming into the year, but it's not extreme," Wald said about the bullish sentiment. "We would look at an extreme reading closer to 75-80 percent bond bulls. That's what marked the contrarian turnaround in 2010 and 2012."

Rates will move lower, said Wald, as bond bears capitulate and change their sentiment. "When you get sentiment to reach an extreme," he added, "then we can get that much-anticipated backup in yields that people have been waiting for here for a few years now."

To see the full discussion on the interest rates, with Sanchez on the fundamentals and Wald on the technicals, watch the above video.

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