The rate on the benchmark 30-year Treasury bond sank to an all-time low on Wednesday while the U.S. yield curve inverted even further as fixed-income traders grew more confident in forecasts of tepid inflation and slower economic growth.

The 30-year bond yield dropped to as low as 1.907% early Wednesday morning, breaking its prior all-time low of 1.916% clinched earlier in August. The 30-year rate later moved off those lows to trade at 1.943%, still below yields on U.S. debt of far shorter duration such as 3-month and 1-month bills.

The yield curve inversion, meanwhile, continued to worsen on Wednesday. The yield on the benchmark 10-year Treasury note slumped further below that of the 2-year note — at 1.469% and 1.504%, respectively — after closing inverted for the second day in a row on Tuesday. Yields fall as prices rise.

Bond traders consider a 10-year rate below the 2-year yield an notable recession signal, marking an unusual phenomenon as bondholders receive better compensation in the short term. Before August, the last inversion of this part of the yield curve began in December 2005, two years before the financial crisis and subsequent recession.

The spread between the 3-month Treasury yield and that of the 10-year note — the Federal Reserve's preferred inversion metric — sank to -54.5 basis points, its lowest level since before the financial crisis.

"There's just a huge Asian bid for any kind of yield," said Tom di Galoma, head of Treasury trading at Seaport Global Holdings. "It's kind of my feeling that you just don't have enough fixed income in the world to actually satisfy the demand. It's kind of a one-way trade."

"But my feeling is that interest rates are telling you that there's some very bad news down the road," he added. "We don't know what that is, but that's what's being signaled to me."