Treasurys have been under pressure of late. After putting in a low of 1.36% on July 8, the benchmark 10-year yield has rallied more than 20 basis points to its current 1.58% as solid economic data and Janet Yellen's hawkish speech at Jackson Hole have traders pricing in the possibility of the next Federal Reserve interest-rate hike coming as soon as the Federal Open Market Committee's September meeting.

In a note sent out to clients on Wednesday, UBS' Technicals team of Michael Riesner and Marc Müller warn, "US Bonds Are Sitting On the Edge." The two suggest that 1.63% is the key level to watch for on the 10-year yield and that a breakout above there sets up the potential for a move as high as 2.00%.

But there is more at play here than just a near-term backup in yields. Riesner and Müller believe a 1.63% yield would not only break the downtrend in the 10-year yield that has been in place since the beginning of 2015 but also be the "ultimate confirmation that a major basing process in US yields is underway."

(UBS)

But not everyone agrees. Bond gurus Komal Sri-Kumar and Gary Shilling, who have been far out in front of this bond-market rally, believe the 10-year yield is going even lower, setting their sights on 0.90% and 1.00% respectively.

Stay tuned.

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