Bond yields are on the rise, but for the wrong reasons, Peter Boockvar says

Rising bond yields took a pause Wednesday as the Federal Reserve convened for its two-day deliberations on monetary policy.

But yields could soon continue their march higher and not for the right reasons, said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

"I think 3.5 percent to 3.75 percent is easy and unfortunately it would be nice to say that's because the economy is great and everything is great and nominal GDP is 5 to 6 percent and we're getting higher interest rates," Boockvar told CNBC's "Futures Now" on Tuesday.

The Fed has triggered some of the rise in bond yields as it hiked rates and wound down its $4.5 trillion balance sheet. The central bank has raised the federal funds rate eight times since December 2015 as a booming economy warranted a move away from crisis-response policy.

However, factors outside of the Fed have also pushed yields to their highest levels since 2011, said Boockvar.

"I expect higher rates to commence outside of Italy and the European bond markets as the European Central Bank is done with their QE. I expect higher rates in Japan as they allow a steeper yield curve," Boockvar said.

The ECB has said it would end its massive bond-buying quantitative easing program in December, eliminating billions of dollars in fiscal stimulus from the global market. The Bank of Japan, too, has tapered some of its own stimulating bond purchases.

The loss of bond-buying monetary stimulus then lowers demand and pushes prices down and yields higher. Yields move inversely to bond prices.

On top of that, U.S. bonds do not look as appealing to domestic and international investors, said Boockvar.

"We have already a huge amount of Treasury supply that I think is overwhelming buyers, we have Japanese and European investors that are not buying U.S. Treasurys because the cost of hedging out that currency has completely wiped out any spread pickup so it's not all for good reason that I expect higher interest rates," he said.

Boockvar's forecast of a 3.5 percent to 3.75 percent yield on the 10-year Treasury note would mark its highest level since early 2011. The 10-year peaked this year at 3.261 percent in early October, its highest level since May 2011.

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