Benchmark 10Y German bund yield falls to record low on dovish Fed

The German 10-year bund yield fell to an all-time low of minus 0.034 percent on Thursday after the US Federal Reserve lowered its economic growth forecasts and scaled back its rate hike projections, while keeping its benchmark policy rate unchanged at a record low.

Also, investors were cautious after recent polls suggested Britain is on course to leave the European Union.

The yield on the benchmark 10-year bonds, which moves inversely to its price fell nearly 1 basis points to -0.017 percent (it slid to -0.034 percent in the early Asian session), yield on super-long 30-year bonds dipped more than 2-1/2 basis point to 0.516 percent and the yield on short-term 2-year note tumbled 1-1/2 basis point to -0.590 percent by 08:40 GMT.

Following the global debt market, the benchmark 10-Year US Treasury yield dipped to four-month low at 1.541 percent, down 5 basis points and the Australian 10-year Treasury note yield fell nearly 6 basis points to 2.014 percent. The 10-year JGB yield added half a basis point to minus 0.190 percent, after plumbing a record low of minus 0.210 before the BOJ's announcement.

Moreover, the Federal Open Market Committee left fed funds rate unchanged in a 0.25-0.50% range, in line with market expectations. One key highlight of the statement was the note that the pace of improvement in the labour market has slowed while growth in economic activity appears to have picked up, adding that although the unemployment rate has declined, job gains have diminished.

Also, FOMC diminished outlook for growth coupled with largely downgraded forecasts for the overnight rate, though median expectations remain unchanged for 50 basis points worth of tightening in 2016.

The June statement reiterated that inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Additionally, the June statement repeated that inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labour market strengthens further. In terms of risks, the Committee continues to closely monitor inflation indicators and global economic and financial developments.

Moreover, the latest polls by various corporate bodies in the United Kingdom in run up to the June 23 Brexit referendum indicate that the percentage of citizens in favor of "leaving" the European Union (EU) has outnumbered those who want to "remain", raising the possibility that Britain might leave the EU after 43 years of membership in the bloc.

According to a new UK poll by Ipsos-Mori, 53 percent participants favoured leaving the EU and 47 percent supported for remaining. This is in line with the other recent surveys showing a swing to a moderate pro-Brexit balance, but contrasts markedly with the previous IPSOS-Mori poll in May that found a double-digit net balance in favour of 'Bremain'.

Today, crude oil tumbled more than 1 percent for six straight days, dragged by a somewhat disappointing U.S. oil data and looming risk of Britain’s departure from the European Union. The American Petroleum Institute (API) showed U.S. crude inventories rose by 1.2 million barrels in the week to June 10 to 536.7 million, against market consensus for a decrease of 2.3 million barrels. The International benchmark Brent futures fell 1.08 percent to $48.44 and West Texas Intermediate (WTI) dipped 1 percent to $47.53 by 07:25 GMT.

Meanwhile, the German stock index DAX Index fell 0.81 percent at 9,532 by 9:00 GMT.