The "seeds of stability" in the U.S. are there, with "some of the data turning against expectations, which are horrible," Eric Pellicciaro, managing director and head of Global Rates Investments at BlackRock Fundamentals Fixed Income Group, told CNBC Monday.
Things may not get a lot better "in terms of [the U.S.] growth picture, but estimates have been pushed down so low that you're probably closer to the bottom of the range for U.S. Treasurys," said Pellicciaro. "That said, you won't see a large sell-off."
In terms of Europe, Pellicciaro said he's been "fairly defensive," but is spending a lot of time now trying to figure out the endgame.
"It's getting even trickier to be defensive here, particularly with valuations where they are. We're focusing on high-quality areas within the credit market in the U.S," he added.
"If the [Federal Reserve] does it right, if we can keep volatility down in the bond market—which is what they are trying to do—then those sharp ratios of those investments will go up," Pellicciaro went on to say. "But it will take some time."
This is the reason for the plan for Operation Twist, or the purchase of longer-dated Treasurys and simultaneous sale of short-dated Treasurys, explained Pellicciaro.
Operation Twist has been talked about as the likely Fed plan that Ben Bernanke, chairman of the Federal Reserve, will unveil for additional easing at the Fed's two-day meeting later this month.
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