Bonds

Treasury yields fall after ECB holds rates steady, Fed releases March minutes

U.S. government debt yields fell on Wednesday after the European Central Bank held interest rates steady and ECB President Mario Draghi warned that recent data confirmed concerns of slower economic growth.

At around 2:51 p.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 2.476%, while the yield on the 30-year Treasury bond was also lower at 2.901%. The German 10-year bund yield hit a low of -0.039%, its lowest level since Apr. 2, when it yielded as low as -0.055%.

The commentary from the ECB came shortly after the International Monetary Fund downgraded its economic growth forecast for the euro zone economy. Uncertainty surrounding geopolitics, trade agreements and emerging markets had weighed on investor sentiment, Draghi added, with risks "tilted to the downside."

"The rally in the US bonds markets didn't really begin into Draghi started speaking," said Guy Lebas, chief fixed income strategist at Janney Montgomery Scott. The ECB took no action, "which isn't surprising because they're running out of options. But [Draghi] did indicate that slight dovish tilt."

Treasurys

Investors are grappling with the intensified trade tensions between the U.S. and the European Union. U.S. Trade Representative Robert Lighthizer on Monday proposed a list of European Union products on which to slap tariffs as retaliation for European aircraft subsidies.

Lighthizer's move follows a World Trade Organization ruling that the subsidies caused "adverse effects to the U.S.," prompting Washington to consider $11 billion worth of retaliatory tariffs on a range of European goods.

But Brussels on Tuesday responded to the prospective U.S. levies by saying it's ready to respond in kind.

The Federal Reserve on Wednesday released the minutes from its most recent meeting, revealing that some members would feel confident raising borrowing costs in 2019 if the U.S. economy continues to grow at a solid pace.

"Some participants indicated that if the economy evolved as they currently expected, with economic growth above its longer-run trend rate, they would likely judge it appropriate to raise the target range for the federal funds rate modestly later this year," the meeting summary stated.

Last month, the U.S. central bank decided to maintain interest rates and suggested it could hold off on increases for the remainder of the year.

The Fed also cut its GDP forecast and announced plans to end its program of reducing the bonds it holds on its balance sheet. The central bank has increasingly emphasized the importance of data in its decision-making process going forward, placing inflation indicators under even greater scrutiny.

The Labor Department said on Wednesday that its Consumer Price Index rose 0.4% in March. The increase was driven in part by increases in the cost of food, gasoline and rents, making for the biggest advance since January 2018 and following February's 0.2% gain.

Core CPI, which excludes volatile food and energy components, ticked 0.1% higher, matching February's slight gain. In the 12 months through March, the core CPI increased 2.0%, the smallest increase since February 2018.

"Core inflation was very slightly below consensus forecasts, but really within the range of random error. And there were a couple categories on the lower side," added Lebas. "The Fed's been really incredibly clear about their plans for the next year, which is definitely nothing: Until we get a major move in economy data, they're on hold."

The Fed, which has an inflation target of 2%, prefers to track the core personal consumption expenditures (PCE) price index as its inflation gauge.

That metric increased 1.8% on a year-on-year basis in January after a rising 2.0% in December.

—CNBC's Sam Meredith and Matt Clinch contributed to this article.