US Treasury yields fell on Tuesday on safety buying after twin attacks on Brussels airport and a rush-hour metro train in the Belgian capital triggered security alerts across western Europe. The blasts occurred four days after the arrest in Brussels of a suspected participant in November militant attacks in Paris that killed 130 people.
Benchmark 10-year notes were last up 6/32 in price to yield 1.90 percent, down from 1.92 percent on Monday. The yields earlier fell as low as 1.88 percent. The attacks were "negative for risky assets and slightly positive for risk free assets," said Gary Pollack, head of fixed income trading at Deutsche Bank Private Wealth Management in New York.
They came during a relatively quiet week with many traders and investors away before a holiday on Friday, when the bond market will be closed. Bond investors are also continuing to evaluate when the Federal Reserve is likely to make its next interest rate increase, after Fed officials on Monday painted an optimistic picture of inflation and domestic growth, keeping an increase in April on the table.
Bond prices had rallied last week after Fed Chair Janet Yellen expressed caution over US inflation, with the central bank also noting that the United States continued to face risks from an uncertain global economy. "The FOMC statement, and Yellen's press conference, was stunningly dovish, especially in light of the uptick in inflation and steady improvement in the labour market," said Lou Brien, a market strategist at DRW Trading Group in Chicago. Chicago Fed President Charles Evans and Philadelphia Fed President Patrick Harker are both due to speak later on Tuesday.
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