Meanwhile, Eurozone manufacturing activity only inched higher at the end of 2018 in a broad slowdown, and observers see few signs of optimism in the new year.
“There’s a demand for safe-haven bonds. You see that in U.S. Treasuries, and you see it in German bunds, though that’s in a catch-up, and Japanese 10-years are negative,” Lederer added.
Looking ahead, market observers will be looking out for U.S. manufacturing survey on Thursday, payrolls data on Friday and U.S. earnings season later this month, which is widely anticipated to reveal slowing corporate profits over the past three months.
Furthermore, the markets are anticipating a lower likelihood that the Federal Reserve will continue to hike interest rates in the weaker economic environment. Fed funds futures, which many use to bet on the direction of Federal Reserve policy, early Wednesday showed an 87% probability policy makers will end the year with interest rates at or below current levels, according to the Wall Street Journal. In comparison, futures prices were showing a 90% probability back in November that rates would end the year higher in 2019.
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