The benchmark 10-year Treasury yield will drop below 2% for the first time ever over the next 12 months as US economic growth loses traction, said David Rosenberg, a high profile economist and one of the biggest bond bulls on Wall Street.

In an interview with Dow Jones Newswires, Rosenberg said yesterday that the yield, which falls when the bond's price rises, may dip to as low as 1.5% if the economy deteriorates further. The 10-year yield, a benchmark for consumer and corporate borrowings, touched a record low of 2.034% on December 18 2008, after the collapse of Lehman Brothers fuelled panic buying.