(Corrects to show German yield is negative in fourth paragraph)
LONDON, Aug 12 (Reuters) - German two-year bond yields fell to a record low on Wednesday, after China let the yuan fall sharply for a second straight day sparking fears around global growth.
Investors sought refuge in top-rated government bonds, like European benchmark German bonds and U.S. equivalents, even though these assets could be most vulnerable if the U.S. Federal Reserve opts to raise rates next month.
“We are seeing a global risk off move, with worries around China clouding the outlook for inflation and leading to a reappraisal of whether the Fed will raise rates in September,” said Commerzbank strategist David Schnautz.
German two-year yields fell to a new record low of minus 0.288 percent, according to Reuters data, while U.S equivalents touched a one-month low of 0.633 percent. (Reporting by John Geddie, editing by Anirban Nag)