By Joseph Adinolfi, MarketWatch Europe's central bank may be one step closer to government bond purchases

NEW YORK (MarketWatch) -- U.S. Treasury yields across the curve were lower Friday after the People's Bank of China's surprise lending-rate cut made U.S. assets look more attractive to foreign investors.

The U.S. Treasury 10-year note yield (10_YEAR) fell 2.1 basis points to 2.310% Friday, according to data from Tradeweb. The 2-year note yield (2_YEAR) shed 0.4 basis points to 0.505%, while the 30-year bond yield (30_YEAR) lost 3.8 basis points to 3.015%. The 5-year note yield (5_YEAR) lost 1.5 basis points to 1.607%.

Yields move inversely to bond prices.

Many analysts attributed the movement in Treasurys to China's rate cut, which they said highlighted the growing divergence between the U.S. economy and rest of the global economy, making U.S. assets appear more attractive by comparison.

But some were more skeptical.

"You will undoubtedly be greeted this morning to the overnight news that China eased and that did something to the markets," said David Ader, head of government bond strategy at CRT Capital Group, in a Friday research note. "We're not so sure."

Ader went on to explain that while the Chinese central bank cut its lending rates, it also widened its deposit rate band to 120% of the benchmark rate, meaning there was effectively no change in the bank's overnight lending rate.

"Simply, there is nothing much to inspire Treasuries, and the price action shows that better than anything we can say on the subject," Ader added.

Meanwhile, European bonds rallied as the European Central Bank began buying asset-backed securities, driving yields lower. Investors say the central bank is now one step closer to buying government bonds.

Perhaps as a result of that notion, the German 10-year bund yield lost 4.8 basis points, falling to 0.767%, while the French 10-year yield lost 3.25 basis points to 1.11%.

Meanwhile, the Italian 10-year yield dropped 1.6 basis points to 2.19%.

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