“There’s a nice trend downwards for U.S. Treasury yields,” Birgit Figge, a fixed-income strategist at DZ Bank AG, told Bloomberg. “The inflation expectations are very low at the moment. If inflation stays low, the Fed doesn’t need to raise in September.”

Yields on benchmark 10-year Treasury notes are hovering around 2.2%. Two-year not yields were at 0.72% and yields on 30-year Treasuries were at 2.87%.

The futures market reveals a 44% chance the Fed will hike benchmark interest rates at its September 16, 17 meeting based on assumptions that the effective fund rate will average 0.375%. The key rate has hovered in a range of zero to 0.25% since December 2008.

“I wouldn’t be surprised to see 10- or 30-year Treasuries outperform a bit more looking at how oil prices are doing,” Jun Kato, senior fund manager at Shinkin Asset Management Co., told Bloomberg. “Investors are seeing a considerably slow pace of Fed rate rises after the first one likely next month, and even the possibility of no further hikes for quite some time.”

Treasury bonds, though, weakened Tuesday, following the improved housing data, which made boost the Fed’s case for raising rates this year.

For more information on the Treasuries market, visit our Treasury bonds category.

Max Chen contributed to this article.