The European Central Bank is widely expected to begin buying the sovereign debt of member countries to stimulate the euro zone economy, but the effects of such quantitative easing would be "negligible," Southwest Securities Managing Director Mark Grant said Monday.
The reason: Most of the borrowing is done on 5-year bonds in Europe, and rates on 5-year sovereign debt in Europe are either negative or just above zero.
"My thought at this point is that the ECB is out of bullets. They don't have anywhere to go. They're facing deflation. I think you're going to see deflationary numbers across the board at the next report in January," Grant told CNBC's "Squawk Box."
On Monday, the euro sank to a nine-year low against the dollar, falling below $1.20.
As for whether the euro experiment will ultimately be a success, he said it would probably not be.
"I think there are too many warring tribes, if you want to look at it that way, that are in opposition to each other. You just have different mindsets in Italy, Spain, Portugal as compared to Germany," he said.
Grant also said he expects a further decline in the U.S. 10-year Treasury (U.S.: US10Y) yield, citing factors such as the relative value of U.S. bonds to those in Europe and Asia, declining oil prices, and a strengthening dollar. He sees yields moving back through 2 percent, down to 1.75 percent and eventually down to 1.5 percent.
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Early last year, Grant predicted 10-year yields would decline from around 3 percent, despite many analysts' expectations for a rise. His call turned out to be correct.