U.S. Treasurys yields fell to six-month lows on Wednesday, breaking out of a recent range, as expectations the European Central Bank will cut interest rates sparked a global fixed-income rally.
The ECB is preparing a package of policy options for its June meeting, including cuts in all its interest rates, and targeted measures aimed at boosting lending to small- and mid-sized firms (SMEs).
A dovish ECB has helped hold down yields on German and U.S. government debt. The bonds' yield moves are often correlated even though the U.S. is seen as poised for stronger growth than Europe, which many expect will eventually send Treasurys yields higher.
"It reinforces the notion that from a global perspective monetary policy is forward committed to lower for longer,'' said Ian Lyngen, a senior government bond strategist at CRT Capital in Stamford, Connecticut.