Market watchers expect the 10-year Treasury’s yield to fall to 4.18 percent in a year, from 4.28 percent currently.

President Donald Trump's renewed calls for Federal Reserve Chair Jerome Powell's resignation have prompted investors to protect portfolios against the risk of higher inflation, as a central bank more willing to lower interest rates could fuel price rises and make lenders demand higher compensation to hold bonds.

Most U.S. stocks are falling on Tuesday after an update on inflation hurt Wall Street's hopes for lower interest rates. Fed Chair Jerome Powell, though, has been adamant that he wants to wait for more data about how tariffs affect the economy and inflation.

The US budget legislation is expected to worsen the country's fiscal outlook without boosting economic growth.

The U.S. is expected on Tuesday to report that rising costs for imported goods lifted overall consumer prices in June, kicking off what might be several months at least of such increases and giving Federal Reserve officials highly awaited data on whether the Trump administration's tariffs are boosting inflation.