Bank of America's Mark Cabana warns that the decline in US Treasuries could resume if the Federal Reserve fails to better communicate to the public how it will achieve its 2% inflation target.

The head of US interest rate strategy for global research noted that the long-end selloff last Wednesday, which pushed yields to nearly 20-year highs, was a "textbook inflation credibility shock." On that day, Fed Chair Kevin Warsh was unable to explain to investors during a press conference how the central bank would curb price increases.

"It's fine to have a firm commitment to achieving 2% inflation, but unless you tell us how you're going to do it, we won't believe you," Cabana said in an interview. "And you can't fool the bond market; it will see right through you."

Bank of America Global Research's Mark Cabana states that the Fed now faces a credibility problem. In a research note Monday, Bank of America Global Research economists wrote that after last week's press conference and bond market reaction, "the Fed must regain the narrative through rate hikes to pass the September test."

"We want to see a plan, but there isn't one yet," Cabana said. "The long end of the yield curve is reflecting that."