Economic forecaster Lakshman Achuthan sees a bearish trend unfolding that should keep Treasury yields at multi-year lows longer than Wall Street anticipates.

Achuthan, co-founder of the Economic Cycle Research Institute, builds his case on a single chart showing forward looking inflation measures.

His major takeaway: Inflation is in a downturn, and it's creating an even more challenging environment for yields.

"The chart is showing leading indicators of inflation," Achuthan told CNBC's "Trading Nation" on Friday. "The bottom line signal from the forward looking indicators on the inflation cycle is that it's going to continue cycling down. It is not transitory."

While the stock market just wrapped up its best week of the year, the 10-year Treasury Note yield fell to a September 2017 low on Friday. Achuthan contends the weakness is "persistent."

"There is the future inflation gauge which is designed to anticipate cycle turning points in inflation. That has been coming down since early 2018," Achuthan said. "It's now down below a three year low."

Achuthan, who has been in the economic slowdown camp since late 2017, believes the Federal Reserve was too hawkish last year, and should have cut interest rates last September. Achuthan contends a cut would have mitigated the scenario Wall Street is in now.

"Both the Fed and the bond market have really been behind the curve in anticipating or recognizing the inflation cycle," he said.

He acknowledges the global flight to quality trade as the U.S.-China trade war churns in the background is also playing a role in falling Treasury yields. However, he sees doesn't see it as the chief driver of the decline.

In a special note to CNBC, Achuthan wrote "the plunge in yields isn't just about investor behavior. It's about the fundamentals of the U.S. inflation cycle that's eluded both the bond markets and the Fed."

And, the inflation downtrend scenario is contributing to higher recession risks, according to Achuthan. But he doesn't believe the stock market is necessarily doomed — especially if the Fed decides to cut rates this year.

"If interest rates are lower, it helps stock market valuations," Achuthan said.