By Sam Goldfarb

U.S. government bond prices rose Thursday as fresh worries about the U.K.'s pending breakup from the European Union helped dampen expectations for tighter monetary policies and boosted the appeal of safer assets.

In recent trading, the yield on the benchmark U.S. 10-year Treasury note was 3.092%, according to Tradeweb, compared with 3.120% Wednesday.

Yields, which fall when bond prices rise, declined overnight as Prime Minister Theresa May struggled to win support for her plan to exit from the EU, raising further concerns about the U.K. and eurozone economies. A series of U.K. government ministers quit in protest over a draft Brexit deal that British and EU negotiators reached on Tuesday.

On Wednesday, Mrs. May secured approval from her cabinet for the pact, which would bind the U.K. to the EU for years after it formally quits the bloc in March. The plan, however, faces serious opposition in Parliament, posing questions about Mrs. May's political future and creating more uncertainty about Europe's economy, which has already showed signs of slowing down in recent months.

In the debt markets, the political turmoil had its greatest impact on U.K. government bonds, with the yield on the U.K. government bond falling to 1.356% in recent trading from 1.503% Wednesday, according to Tradeweb. The yield on Germany's 10-year bond also fell to 0.356%, compared with 0.401% Wednesday.

The rally in government bonds came after Federal Reserve Chairman Jerome Powell said late Wednesday that the U.S. central bank was closely monitoring a modest deceleration in economic growth outside of the U.S., which he said was increasingly important for U.S. businesses.

While Mr. Powell played down the idea that the Fed would change its plans on interest-rate increases based on recent volatility in financial markets, some investors and analysts still interpreted his remarks as leaning in a cautious direction.

"I thought his comments were slightly dovish for the financial markets in that he recognized that growth going forward faces many headwinds, which could impact the Fed's path toward raising interest rates," said Gary Pollack, head of fixed-income trading at Deutsche Bank AG's private wealth management unit.

With traders focused on the U.K., Treasurys registered a relatively muted reaction to new U.S. economic data releases.

Among those was a report that U.S. retail sales rose 0.8% in October from the prior month. That was above the 0.5% gain anticipated by economists surveyed by The Wall Street Journal. Excluding motor vehicles and gasoline, the increase in sales was a more modest 0.3%

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

(END) Dow Jones Newswires

November 15, 2018 11:44 ET (16:44 GMT)

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