“Data will be very, very much in focus and highly parsed as we near September,” said Christopher Sullivan, who oversees $2.3 billion as chief investment officer at United Nations Federal Credit Union in New York. Manufacturing data for the U.S. “was a tad weaker than expected. It tilted bonds firmer.”

The U.S. 10-year note yield fell one basis point, or 0.01 percentage point, to 2.17 percent at about 10:35 a.m. New York time, according to Bloomberg Bond Trader data. The 2.125 percent security due in May 2025 climbed 2/32, or 63 cents per $1,000 face amount, to 99 19/32. The yield reached the lowest level since June 1.

Fed Chair Janet Yellen said in July she expected the central bank to raise its benchmark rate this year, while emphasizing the pace of increases will probably be gradual.

Policy makers expect inflation to accelerate gradually toward their 2 percent target, the central bank 
said in a statement at its July 28-29 meeting.

Eoin Treacy's view

Investors would appear to be voting with their feet and taking a safe haven hedge to the soft performance of stock markets by buying bonds. 

Today’s move in 10-year yields breaks the progression of higher reaction lows and suggests a more volatile environment is unfolding within what continues to look like a developing medium-term base formation. . 

US 30-year futures found support in the region of the 200-day MA and the medium-term uptrend from last month and continue to rebound.

German Bunds shares a similar pattern suggesting the desire to capture yield at these levels is not confined to the USA.