Bond Rally Drives 30-year Treasury Yield to Record Low

Another wave of buying in the U.S. government-bond market pushed the yield on the 30-year Treasury note to a record low on Wednesday, the latest sign of mounting economic anxiety as investors react to continuing trade tensions and evidence of slowing growth around the world.

As government bond yields fell sharply across the developed world, the yield on the benchmark 30-year U.S. Treasury note—the longest type of U.S. government debt and one of the most sensitive to changes in expectations for long-term growth and inflation—dropped to as low as 2.018% in early trading Wednesday, according to Tradeweb. That was well below its previous intraday low of 2.094% set in July 2016.

In recent trading, the 30-year yield was at 2.057%, compared with 2.131% Tuesday.

Yields, which fall when bond prices rise, have been declining steadily for weeks thanks in part to escalating trade tensions between the U.S. and China. They perked up Tuesday after President Trump said he was delaying some tariffs on Chinese goods. But they resumed their fall in the overnight session following disappointing economic data out of China and the eurozone.

In recent trading, the yield on the benchmark 10-year Treasury note was 1.603%, compared with 1.678% Tuesday. Earlier in the session, the 10-year yield briefly fell below that of the two-year yield, a further inversion of the so-called yield curve, which is often viewed as a sign that an economic recession could be looming.

The record-low level for the 30-year yield reflects muted U.S. inflation as well as investors’ demand for safe, relatively high-yielding debt at a time when trillions of dollars of government debt around the world are carrying negative yields, investors and analysts say.

Inflation is a main threat to long-term government bonds because it erodes the purchasing power of their fixed payments.

The U.S. government bond market overall is “definitely showing concern with the direction of the U.S. economy,” said

Sean Simko,

head of fixed-income portfolio management at SEI.

Mr. Simko said his team has been looking to buy Treasurys whenever yields rise given the array of global developments that have investors searching for safer assets to buy.

Some investors say that low yields reflect concern that the Federal Reserve and other central banks around the world aren’t doing enough to sustain economic growth.

Federal-funds futures, which investors use to bet on the path of central bank policy, showed Wednesday that investors increased their bets that policy makers will accelerate the pace at which they lower rates for the balance of the year, according to CME Group data.

The probability of additional rate cuts totaling 0.75 percentage point by the end of the year rose to about 50% from roughly one-in-three odds Tuesday.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

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