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US 10-year Treasury could dip below 1.25 percent, Mark Grant says

Grant: Money driving yields down, equities up

Yield on the 10-year Treasury could dip below 1.25 percent, Hilltop Securities Managing Director Mark Grant said Friday.

To be sure, Grant said he still believes the floor for the 10-year yield is 1.25 percent. He made that call on CNBC's "Squawk Box" in March. At the time, rates were yielding nearly 1.8 percent, and have since hit a 52-week low of 1.36 percent.

Grant spoke one day after the Bank of England cut interest rates for the first time in more than seven years and launched new bond-buying measures. With the BOE joining the European Central Bank and Bank of Japan in easy monetary policy, the pressure will only ratchet up on yields, Grant said.

"It could drop even lower" than 1.25 percent, he told CNBC's "Squawk Box" on Friday.

"But I think one and a quarter is the next place we're going to get to. There is … about $220 billion — $220 billion — a month coming from the central banks of the world into sovereign debt, dragging $12 trillion worth of sovereign debt into negative yield."

"We're going down hugely in corporate-bond yields and other risk-asset bonds, and it's all about the money. Money is just driving yields down and driving equities up," he said.

With so much central-bank money flooding into fixed income and suppressing yield, stock prices will only keep rising, despite the absence of strong fundamental factors, he said. That is particularly true for U.S. equities, he added.

"We're bigger, more liquid, and safer," he said.

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