By Sam Goldfarb 

U.S. government-bond prices rose anew Monday, pushing the yield on the 10-year Treasury note to a nearly 15-month low, amid continued concerns about the outlook for global economic growth.

The yield on the benchmark 10-year U.S. Treasury note settled at 2.418%, its lowest close since December 2017, compared with 2.459% Friday.

Yields, which drop when bond prices rise, extended declines after falling sharply Friday in response to weak readings from the eurozone manufacturing sector.

Yields had actually crept higher overnight as data showed improvement in German business sentiment. But they dropped again near the start of U.S. trading and continued sinking throughout much of the day, with some analysts blaming technical factors such as buying from holders of mortgage-backed securities who sometimes exacerbate moves in government bonds as they try to maintain a relatively consistent exposure to interest-rate swings.

Though investors this year have generally been optimistic about the outlook for the U.S. economy -- leading to gains in stocks and other riskier assets -- the bond market is now flashing warning signs.

On Friday, the yield on the 10-year Treasury yield dropped below the yield on the three-month Treasury bill for the first time since August 2007 -- a so-called yield-curve inversion that historically has been a good predictor of recessions.

Some investors and analysts say there could still be relatively benign explanations for the recent moves in Treasurys. Friday's rally, for example, was led by bonds in Europe, where the yield on the 10-year German bond dropped below zero percent for the first time since 2016. As yields fall overseas, it can spark extra demand for Treasurys without necessarily meaning that the U.S. economy itself is in trouble.

Some analysts also have said that the decline in Treasury yields may be partially due to the recent announcement from the Federal Reserve that it will hold more longer-term government bonds than many expected. That decision, analysts said, was largely driven by technical considerations about how the central bank sets short-term interest rates, but it nonetheless could bolster Treasurys by curtailing the supply of government debt.

"We sort of went from the world is swimming in bonds to we may have occasional shortages of bonds over the next couple years," said Jim Vogel, an interest-rates strategist at FTN Financial.

Even so, signs of slowing global growth have led to a big increase in bets that the Fed lower interest rates this year.

Federal-funds futures, used by investors to place bets on the course of interest rates set by the Fed, on Monday showed a 73% chance of a rate cut by the end of the year, according to CME Group data. That was up from 54% Friday and 13% a month ago.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

(END) Dow Jones Newswires

March 25, 2019 16:16 ET (20:16 GMT)