Guggenheim's Scott Minerd, who called the yield decline, says the 10-year could head back below 1%

Published Fri, Jul 9 20216:51 AM EDT

Jesse Pound @/in/jesse-pound @jesserpound

Guggenheim Global Chief Investment Officer Scott Minerd said Friday that the 10-year Treasury yield should continue to fall and could return to its crisis lows from last year. The benchmark Treasury yield touched 1.25% on Thursday , continuing a sharp decline from earlier this year when it traded above 1.7%. Yields move inversely to prices. That move has made Minerd's contrarian call in March, when he said that a surge in yields would soon reverse , look prescient. Minerd told CNBC's Brian Sullivan on Friday's " Worldwide Exchange " that the 10-year Treasury yield would "easily" finish the year under 1.5% and likely would finish much lower. "We're reaching some technical levels here where we probably need to start to think about what the longer term view is. I just did some charts before I came in the room, and I don't really see any significant resistance for the continuation of the decline in yields until we get to 1%, and then I don't think that's that significant," Minerd said. "Technically, it looks like we're going back to the lows, which would be 65 basis points," he concluded. The 10-year yield sliding under 1% would represent a dramatic miss for many Wall Street strategists, as calling for the measure to hit 2% by the end of the year has been a common call. One reason for yields to move lower, Minerd, is said that economic growth was near a peak, and as the data points show a slowdown it will create more buying pressure for bonds. The crux of Minerd's argument in March was that the strong economic recovery would not be enough to overcome the trend of a 30-year decline in yields, and that the hot start to the year for yields would prove to be a temporary one before they reverted to their previous trajectory. He said on Friday that there was still strong demand for Treasury bonds from multiple sources, even as rates are at low levels relative to history. "There's a lot of money coming in from overseas. We are still perhaps the highest yielding market in the developed markets. There's pension fund money that has to be put to work," Minerd said. "As you know, we manage a lot of insurance company assets, and flows coming in from insurance companies, especially fixed annuity assets, is exceptionally strong." The potential for even lower Treasury yields should support the equity market taking another leg higher, Minerd said, but added that stocks were due for a correction in the coming months. The 10-year Treasury yield was bouncing a bit on Friday, but hit its lowest since February in the prior session. Watch the full interview with Minerd above, including an exclusive segment for CNBC Pro subscribers.

Scott Minerd, Guggenheim Partners

Scott Mlyn | CNBC

Guggenheim Global Chief Investment Officer Scott Minerd said Friday that the 10-year Treasury yield should continue to fall and could return to its crisis lows from last year.