Something strange is happening in the market. Stocks have been recovering their losses, but the rate on the U.S. 10-year Treasury has barely budged.
In fact, the yield on the benchmark 10-year note has remained in a range between 2.6 and 2.8 percent since late January after starting the year around 3 percent. Rates and bond prices move inversely to each other.
So if stocks continue to rally, will bonds sell off?
CNBC contributor Gina Sanchez, founder of Chantico Global, said don't bet on it.
"I don’t really think we're going to see the interest rates really start to rise considerably until we see a change in inflation expectations," said Sanchez. "We're still a ways off from that, even though we're expecting that, at some point next year, the (Federal Reserve Bank) is going to raise rates. We're definitely getting the signal that bonds aren't really reacting yet."
Either way, rates will play a crucial role in where stocks go next.
"I think the 10-year is the big tell, maybe the most important indicator for the equity market right here," said Ari Wald, head of technical analysis at Oppenheimer & Co. "Looking back at the past couple of years, equities have been able to do well when yields were both rising and moving sideways. So, the fact that stocks are doing well during the sideways range in yields is not surprising to me. What would give me much more concern is if yields really start to break lower here."
So, where are rates headed next? Wald is keying in on the 2.5-percent yield level in the 10-year Treasury note.
"I think that's very important for the 10-year to hold," said Wald. "What's got me a little bit cautious is that 10-years had some opportunities to back up from their 200-day [moving average but] they couldn't do that."
After breaking below a series of recent higher lows, Wald said she sees rates headed south. "We could be moving down to that 2 ½ percent level," he said.
To see the full discussion on what's next for rates, with Sanchez on the fundamentals and Wald on the technicals, watch the video above.