German government bond yields edged lower on Monday as signs of an economic slowdown in China, Washington's political deadlock and Brexit worries kept investors wary and strengthened the bid for safe assets such as Bunds. The most potent of these was the confirmation that China's economic growth cooled slightly in the fourth quarter from a year earlier, leaving 2018 growth the weakest in 28 years.
Signs of further cooling in China - which has generated nearly a third of global growth in recent years - are stoking worries about risks to the world economy and are weighing on profits for firms ranging from Apple to big carmakers. "The Chinese data, while there are some positives on the retail and industrial production side, is just confirmation the Chinese economy is also slowing and adds to the ongoing economic pessimism," said DZ Bank analyst Sebastian Fellechner.
"You add to this the ongoing government shut down and the uncertainty over Brexit, the mix of all these negative headlines is contributing to the movement in Bunds."
German 10-year government bond yields, the benchmark for the region, dipped to 0.256 percent, coming off a one-month high of 0.276 percent hit on Friday.
Other euro zone yields were flat to a touch lower on the day.
Last week, that 10-year Bund yield recorded its biggest weekly rise since early November on growing hopes that Britain was heading towards a "soft Brexit", boosting sterling and curbing the safety bid for Bunds.
But that optimism has taken a hit since, and sterling is now 1.2 percent off a two-month peak of $1.30 hit last week.
British Gilt yields also edged lower to 1.347 percent, coming off a six-week high hit on Friday.
Also over the weekend, US President Donald Trump said his proposed immigration deal to end a 30-day partial government shutdown would not lead to amnesty for "Dreamers" - immigrants brought to the United States illegally as children - but he appeared to signal support for amnesty as part of a broader immigration agreement.
With US markets closed for Martin Luther King, Jr. Day, there was no trading in US Treasuries and any reaction to the news would likely filter through on Tuesday as a result.
Later in the week, investors will keep a close eye on Thursday's European Central Bank meeting to see if policymakers will react to worsening global economic prospects, yet analysts suggested it may be too early for a change in policy direction. "It will be hard for the ECB to surprise on the dovish side ... At best one could hope for more hints regarding future TLTROs," Mizuho strategists said in a note, referring to cheap ECB loans to banks called the Targeted Longer-Term Refinancing Operations (TLTROs).