The European Central Bank (ECB) is expected to signal easier monetary policy when it meets on Thursday.

The Federal Reserve is also seen as certain to cut its benchmark rate at its July 30-31 meeting.

Though a 25-basis-point cut by the Fed is viewed as more likely than a deeper one, some analysts have argued that a 50- basis-point decrease would be more effective at stimulating the economy and offsetting concerns about slowing global growth.

"I think if they do 25 basis points, both the bond market and the stock market will sell off, because I think the market will be disappointed they didn't do 50 basis points," said Tom di Galoma, a managing director at Seaport Global Holdings.

Interest rate futures traders are pricing in a 79pc chance of a 25-basis-point cut and a 21pc chance of a 50-basis-point one, according to the CME Group's FedWatch tool.

Benchmark 10-year notes fell 5/32 in price to yield 2.060pc, up from 2.043pc on Monday. The yields have held between 2.023pc and 2.078pc for four consecutive trading sessions.

Expectations that the US central bank could make a 50- basis-point cut rose last week after New York Fed President John Williams argued for fast action to stave off economic weakness, but receded after the New York Fed said the comments were not about upcoming policy action.

The International Monetary Fund on Tuesday lowered its forecast for global growth this year and next, warning that more US-China tariffs, auto tariffs or a disorderly Brexit could further slow growth, weaken investment and disrupt supply chains.

Yields on short-term Treasury bills increased after President Donald Trump and US congressional leaders reached a deal on a two-year extension of the debt limit and federal spending caps that would avert a feared government default later this year but add to rising budget deficits.

It will also sell $41 billion in five-year notes on Wednesday and $32 billion in seven-year notes on Thursday.