US 10-year yield will hit 1.5 percent: Analyst

Sri-Kumar's next 10-year target

In August, Komal Sri-Kumar predicted that yields on the U.S. 10-year Treasury note would fall below 2 percent within six months. The 10-year yield sits just above 1.8 percent, and he projects that U.S. bond yields will tank even more.

If the Federal Reserve decides not to raise interest rates in the near future, the U.S. 30-year Treasury yield will slide toward 2 percent while the 10-year will continue lower to about 1.5 percent, Sri-Kumar, president of Sri-Kumar Global Strategies, said Wednesday on CNBC's "Street Signs."

"I'm not looking for a Fed rate hike because, if you look at the next six months, you are looking at the dollar being much stronger than it is today, the global economy being very weak," Sri-Kumar said.

Komal Sri-Kumar
Danny Moloshok | Reuters

Speculation has mounted that the Fed could tighten monetary policy this year while Europe eases. U.S. Treasury yields were up slightly on Wednesday, with the 30-year yield sitting just above 2.4 percent.

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If the Fed decides to raise rates, Sri-Kumar believes the amount by which rates are hiked will determine reaction in both U.S. bond and equity markets. The federal funds rate jumping by a quarter of a point would not have a "significant" effect on U.S. Treasurys, he said.

He also contended that the Fed is more likely to resume quantitative easing by the end of 2015 than raising interest rates by June.

"This is a patient who's been in an oxygen tent for six years," Sri-Kumar said. "The U.S. economy hasn't breathed on its own yet without the benefit of zero interest rates."

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