U.S. Treasury yields are bound to head lower thanks to a mix of European monetary policy and a widespread institutional trade, the managing director at Southwest Securities told CNBC on Wednesday.
Mark Grant said activity in futures markets indicate big institutional investors drove U.S. Treasurys down and then front-ran the European Central Bank ahead of its bond-buying program, which kicked off on Monday. Those institutions got out of Treasurys and bought sovereign debt all over Europe, he said in a "Squawk Box" interview.
As the ECB pushes rates into negative territory, those investors "are making very nice profits," Grant said. Eventually that money will come back into Treasurys and drive down yield in a second leg, he added.
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The whole process will take two or three months—if that, he told CNBC.
"We're seeing velocities pick up—and the ECB—it really depends on how quickly they start buying bonds and start driving everything into negative territory," he said.
The 10-year Treasury fell to 2.1 percent on Wednesday ahead of an auction of U.S. debt.
Grant previously predicted the euro would reach parity with the U.S. dollar. On Wednesday, he said the only surprise is how quickly the currency has fallen.
The euro dipped to a nearly 12-year low below 1.06 to the dollar on Wednesday.