Treasury yields fell in early Thursday trading, dragged lower by a slide in European yields after eurozone growth expectations for this year were slashed, adding to mounting concerns a global economic slowdown was under way.
The 10-year Treasury note yield TMUBMUSD10Y, -1.27% slipped 3.8 basis points to 2.668%, while the 2-year note yield TMUBMUSD02Y, -0.97% was down 2 basis points to 2.504%. The 30-year bond yield TMUBMUSD30Y, -0.66% fell 2.9 basis points to 3.010%.
The German 10-year bond yield TMBMKDE-10Y, -22.68% retreated 4.4 basis points to 0.121%, while the Italian 10-year yield rose 7.5 basis points to 2.912%. Bond prices move inversely to yields.
German and other European bonds mostly rallied after the European Commission cut its growth forecast for the eurozone's 19 member states to 1.3% for 2019 from its earlier forecast of 1.9%, citing the sharp deterioration in global trade. Treasurys and their German peers often follow each other as they're both considered haven investments.
On the other hand, Italian government paper sold off as Italy's growth forecast was cut to 0.2%, from previous expectations for 1.2%. Weaker growth would undermine Italy's pledge to keep its budget deficit to 2.04% of the country's annual economic output in 2019 — the government's budget forecast assumed GDP would grow at 1% — potentially setting up another clash between Rome and Brussels.
The Bank of England stood pat, as expected, at its February meeting. The central bank also snipped its growth expectations for the United Kingdom to 1.2% this year from 1.7%. Investors say the lack of progress on Britain's plans to leave the European Union has kept the BOE on hold.
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