Government bond yields in the UK, US and Germany hit record lows yesterday as investors ran for cover after more weak economic data.

Commodity prices also went into tailspin as fears about the slowing economic recovery gathered pace.

The markets look set to come under further pressure this week with durable goods orders, consumer confidence and the revised US second quarter GDP data all set to be released. Federal Reserve chairman Ben Bernanke is also set to address the markets about the Fed’s move to reinvest cash from maturing mortgage-backed securities on Friday.

The concerns about the economy were exacerbated yesterday by the revelation that purchases of previously owned homes unexpectedly sank by 27.2% in July to a 15 year low.

The FTSE sank by 1.51% on the news, while the Dow Jones fell 1.32% and the S&P 500 was down as much as 1.9% as investors took flight.

The wall of money piling into ‘safe haven’ government debt pushed the yield on benchmark 10 year German government bonds down to record lows of 2.15%, while gilt yields fell to 2.85% and Treasuries slumped to their lowest yield since the market nadir of March 2009 at 2.47%. Two year Treasury notes hit a record low of 0.46%. Euro investors were also hit by fresh concerns about Ireland after the country was downgraded to AA- by Standard & Poor’s and given a negative outlook.

The yen’s safe haven status was underlined as it rose to a 15 year high against the dollar as investors took flight from more risky currencies, such as the Australian dollar- hamstrung by hung parliament fears.