Most Wall Street analysts predicted a bear market for bonds in2014 and got it wrong. Who's to say they'll get it right thisyear?

After all, today's consensus forecast is similar to what it was a yearago: U.S. government-bond yields will finally start climbing as theFederal Reserve prepares to raise interest rates. Analysts predictbenchmark 10-year yields will rise to 3.06 percent by year-end, upfrom 2.05 percent today.

This seems reasonable if oil prices stabilize after plunging asmuch as 50 percent in 2014. And if U.S. economic growth acceleratesto a 3 percent rate from 2.3 percent last year, as predicted in aBloomberg survey of analysts. And if Europe also avoids deflationas policy makers pump stimulus into the region.

Here's an alternative narrative that would cause thoseassumptions to unravel:

1) Oil falls further from prices that are already at five-yearlows, spurring a wave of defaults among more than US$200 billion ofoutstanding U.S. energy-related high-yield bonds. UBS Group AGanalysts said last month that the default rate for this segmentcould more than double this year to 10 percent if prices on WestTexas Intermediate crude stay near $50 a barrel.

Prices dropped to $50.73 a barrel as of 9:45 a.m. in NewYork.

2) Junk bonds tend to be a leading indicator for U.S. equities,which are supposed to post another year of gains, according topretty much every major Wall Street analyst surveyed byBloomberg.

While speculative-grade securities had a rough time in 2014,delivering their worst annual return since 2008, the Standard &Poor's 500 Index gained 11.4 percent even as economists cut theirpredictions for global growth.

“The bond market is saying there's a better chance than youthink that there's a 10 percent correction in the first half of theyear” for stocks, Jim Bianco, president of Bianco Research LLC,said in a telephone interview last month.

If stocks follow junk bonds down, that may be a problem for theFed because it would be hard to justify arate increase with equities tumbling, he said.

3) The U.S. dollar will climb this year to the highest levelsince 2003 relative to six major peers, according to a Bloombergsurvey. While that's a sign of growing confidence in the world'sbiggest economy, it's also a problem for developing nations thathave sold a record amount of dollar-denominated bonds.

The size of the Bank of America Merrill Lynch U.S. EmergingMarkets External Debt Sovereign & Corporate Index has swelledto $1.6 trillion of securities, from $496.3 billion eight yearsago. As currencies of Brazil to Russia lose value, it'lleffectively cost more and more for those nations to repay theirdebt issued in dollars.

A rash of insolvencies on sovereign debt would no doubt hurtrisk appetite and economic growth, sending investors back tosafe-haven assets—in other words, U.S. Treasuries.

4) The European Central Bank may fail to come through with astimulus package that meets the market's expectations.

“Mario Draghi has been very lucky to have the market to do whathe wants to do without spending any money,” Jonathan Mackay, seniormarket strategist at Morgan Stanley's $2 trillion wealth-managementunit, said last month in a telephone interview.

Italy's debt gained 15.1 percent last year and French bondsreturned 12.1 percent. The securities may be poised to lose if itbecomes clear that the ECB isn't about to engage in more extensivebond buying.

The potential for Greece to exit the monetary union doesn't helpthe region's outlook, either. That would prompt an event thatUniversity of California at Berkeley economist Barry Eichengreencalled “Lehman Brothers squared” in a panel discussion this pastweekend.

One thing is certain, according to Mackay: “Nothing happens theway that the consensus sees it happening.”

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.