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How low can they go? Traders eyeing global rates

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Best August in 14 years

Stock traders will be watching a brief flurry of economic reports Thursday, but the main attraction could be the bond market.

Reputed to be dull, bonds have been anything but this week. Caught in a tug of war between the opposing policy modes of a tightening U.S. Fed and an easing European Central Bank, bond yields have taken dramatic turns as investors also adjust portfolios ahead of month's end.

While the broke through the 2,000 mark for the first time, bond traders this week have been watching yields creep ever lower in Europe, with yields on shorter duration sovereign debt from Germany and Belgium to the Netherlands and Finland turning negative. The benchmark German 10-year bund fell through 0.90 percent for the first time Wednesday, while Italian and Spanish 10-year yields traded beneath the U.S. 10-year yield. It was not that long ago that those peripheral euro zone securities were seen as risky high yielders.