The 'most disappointing trade' on Wall Street may be turning around

Have bond yields finally bottomed?

The yield on the benchmark 10-year Treasury note was hovering near a one-month high on Wednesday, at 2.24 percent, ahead of the Federal Reserve's afternoon decision on its federal funds rate and subsequent remarks on the state of monetary policy.

Some strategists believe a hawkish tone will emerge from the meeting that will boost the 10-year Treasury yield and perhaps turn around a multiyear downtrend for what many consider to be a gauge of economic health.

Craig Johnson, chief market technician at Piper Jaffray, said the technical picture is supportive of further upside for the yield on the 10-year note, pointing to key levels in a two-year chart.

"We're coming right up to the downtrend resistance line" at roughly 2.5 percent that was last seen in March, Johnson said Tuesday on CNBC's "Trading Nation."

"The most disappointing trade for everybody on Wall Street has been … people have been talking about rising rates now for the last three years; it hasn't happened. Perhaps now is the time when that finally starts to occur," he said.

If the 10-year yield rises north of 2.6 or 2.7 percent, Johnson said, "you start reversing that long-term 30-year downtrend."

Indeed, the yield has been on a persistent downtrend for years and has continued to decline this year as economic growth has come into question, along with consistent misses on key measures of inflation.

As it stands, the chance of a rate hike in Wednesday's announcement is virtually none; the chance of a rate hike to come in December is being priced in as a coin flip.

The market would be surprised by more-dovish-than-anticipated rhetoric from Fed Chair Janet Yellen on Wednesday, said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management. He said the central bank officials will reflect they are on a path to continue normalizing monetary policy.

"It's going to be very unlikely that they're simply going to relent and say, 'Yeah, there's no chance we're going to raise rates in December.' They're going to maintain a much more hawkish posture. They're going to say that the rate hike is still very much on the table. And that's going to provide the support for the yield to perhaps move toward 2.35 [percent] or 2.4 [percent]," he said Tuesday on "Trading Nation."