The yen, a prominent gauge of investor risk aversion, gained while the Chinese yuan slumped to a 6-month low.
The risk premium is correlated to global trade growth which is under profound pressure from USA trade policies, Mizuho said. The yield has been confined to a 15-basis-point range in June after fluctuating by almost 40 basis points in May, when it touched a seven-year high of 3.128 percent.
"Furthermore, it is hard to gauge whether the Trump administration is poised to become even more conservative towards trade issues or if it wants to ease its stance", said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
The move came after US motorcycle maker Harley-Davidson Inc said earlier this week it would move production intended for for European markets outside the United States to avoid retaliatory tariffs.
European Commission Vice President for Jobs, Growth, Investment and Competitiveness Jyrki Katainen said: "I am confident that the exchanges we have had with my new counterpart, Liu He, have been useful in paving the way towards a successful EU-China Summit in the economic and trade field".
Although that lifted USA stocks initially, optimism quickly evaporated after White House economic adviser Larry Kudlow said Trump's remarks did not indicate a softened stance on China.
"Countries imposing retaliatory tariffs "falsely assert" that USA steel and aluminium tariffs are "safeguard" actions meant to protect US producers from imports", he said in a statement. But there are growing worries Trump's trade policies may hasten that.
An atmosphere of uncertainty has kept investors on the defensive and in search of safe-heaven assets, as the fallout of the United States administration's "America First" agenda spreads to other major economies.
US Futures are also pointing lower, with the Nasdaq set to lose 1% at the opening bell.
Isolated storms, humid holiday ahead
We're starting off with temperatures in the upper-60s and low-70s, several degrees warmer than this time Monday morning. The release outlined that "temperatures today are in the upper 90s, with heat index values in excess of 100 degrees".
The fall in US bonds yields came despite inflationary pressure stemming from rising oil prices.
Early Wednesday, U.S. crude was up 8 cents at $70.61, while Brent climbed 24 cents to $76.55 a barrel. USA gold futures GCcv1 fell 0.25 percent to $1,256.80 an ounce.
A market analyst from Shanghai told Reuters the move "demonstrates the government's attitude that we will import from other countries".
In currency markets, trade-sensitive currencies including the Australian and New Zealand dollars lost ground while the safe-haven yen found demand.
The euro slipped in European trading, under pressure from the trade conflict, the threat of a political crisis in Germany and uncertainty over a European Union summit.
Beijing is monitoring the impact of the proposed strengthening of the Committee on Foreign Investment in the United States, after Treasury Secretary Steven Mnuchin won an internal fight to stave off an even tougher approach to curbing Chinese investment in USA technology.
The Chinese currency weakened beyond a psychologically key 6.6 per dollar level for the first time in six months on Wednesday.
The Chinese yuan is getting hosed, falling to the lowest this year on Wednesday.