By Daniel Kruger 

The yield on the benchmark 10-year Treasury note fell to its lowest level since 2017, dragged down by growing investor concerns that trade tensions between the U.S. and China could last longer and strain growth more than previously thought.

The 10-year yield recently traded at 2.329%, according to Tradeweb, down from 2.393% Wednesday. That is below its 2019 low and near the lowest close since late 2017.

Yields, which fall as bond prices rise, slid as global stocks faltered after surveys of purchasing managers in Europe suggested weak demand for exports, a sign it could be difficult for the region to climb out of its rut.

They extended their declines after a pair of reports suggested the economy could be losing steam. New-home sales declined 6.9% in April, the biggest decrease since December, the Commerce Department said Thursday. Economists surveyed by The Wall Street Journal had expected a 2.7% drop.

A flash reading of the IHS Markit Composite PMI Output Index, a measure of overall business activity in the manufacturing and services sectors, fell to 50.9 in May, down from 53 in April. The lower growth in output from both sectors was due to softer demand and fewer new orders.

The yield on the 10-year note fell below the yield on the three-month Treasury bill for the first time since May 15, raising concerns among some investors about the durability of the economic expansion.

Investors watch the dispersion between yields on short- and longer-term Treasurys, called the yield curve, because it is seen as an important barometer of economic conditions. Shorter-term yields tend to exceed longer-term ones before recessions, a phenomenon known as an inverted yield curve.

Bank of America Merrill Lynch Wednesday lowered its year-end forecasts for sovereign bond yields in countries including the U.S., Germany and Australia, citing a loss in confidence that the U.S. and China can resolve their disputes in the near future.

"Everybody is reassessing," said Jim Vogel, head of interest-rate strategy at FTN Financial. It will take time for investors to re-evaluate what has changed about their view of the economy and how that underpins markets, and in the beginning of that process "you have people reflexively flich and move away from risk," he said.

Write to Daniel Kruger at Daniel.Kruger@wsj.com

(END) Dow Jones Newswires

May 23, 2019 10:57 ET (14:57 GMT)