Is the bond market getting more optimistic?

A potential sign of economic strength in the bond market has failed to convince some traders.

Yields on U.S. Treasurys have gained this week, with the 10-year yield hitting its highest level in over a month on Thursday. The 2-year note also saw the highest yield since early January. Stacey Gilbert, head of derivative strategy at Susquehanna, said the recent move is attributable in part to restored confidence in the economy.

As U.S. stocks have rallied nearly 10 percent off their lows from this year, Gilbert said probability of a recession has decreased. Consequently, the likelihood that the Federal Reserve will raise rates sometime this year as increased, she noted.

However, the initial economic concerns that sparked a sell-off this year are still present, Gilbert said.

"It's not as if the economy is all well and good here," she said Thursday on CNBC's "Trading Nation." "But I think the likelihood, or at least the expectation, of a recession coming down the pike has been reduced, and that's part of what you're seeing in the 10-year."

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Max Wolff, chief economist at Manhattan Venture Partners, said the rise in bond yields is more of a rotation of assets than a full-fledged rally.

"Nothing fundamental or macroeconomic has changed," Wolff said Thursday on "Trading Nation." "Emotion has changed, [but the] underlying condition — status quo."

As investors debate which assets will yield the most returns, Wolff said quick changes in perception have caused a whipsaw in the markets, which have also contributed to rising and falling bond yields.

"The United States is playing a game here of being the least dirty shirt in the hamper. And there's all kinds of things being added and subtracted from the hamper," Wolff said. "So money runs around, but I don't think there's much conviction in being so positive about the U.S. here, it just looks better than some of the other options."

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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