The real yield on US 10-year debt fell to a record low as concerns grew over the outlook for economic growth.
The rate, which strips out inflation, fell five basis points to minus 1.127 percent. The move was compounded by a lack of trading liquidity, with the 10-year breakeven rate - a market proxy for the average annual rate of consumer prices over the next decade - holding steady at 2.34 percent.
Still, it points to souring investor sentiment amid the rapid spread of the delta variant that threatens to derail the economic recovery. And it comes as investors piled into haven assets after a surprise hit to Germany's business confidence.
"We are in a regime of growth deceleration in the US, as the recovery becomes more mature and broad based, at the same time as inflationary pressures build," said Peter Chatwell, head of multi-asset strategy at Mizuho International.
"Risk do seem to the hawkish side, it's hard to see a dovish pivot given the inflation data," said Mark Nash, a money manager at Jupiter Investment Management.