The market was also underpinned after the Federal Reserve signalled last week that it would keep rates exceptionally low for another three years, with medium-term notes such as five-year paper the main beneficiaries.

The yield on 10-year T-notes stood at 1.86 percent, slightly off 1.85 percent in late US trade on Monday and a six-week low of 1.814 percent hit that day.

Five-year notes traded at a yield of 0.75 percent, near Monday's low of 0.7170 percent, the lowest level since at least the 1960s, as investors snatched up the maturity following the Fed's policy meeting last week. The yield has fallen about 20 basis points since then.

The latest catalyst for the rally in the market has been renewed fears on Portugal as prices for insuring against a default by the country hit all-time highs.

"The Fed's statement means a lot but there are other negative signs on the economy. US GDP was not so strong and now we have talk that Portugal may need a debt restructuring," said a trader at a Japanese bank.

"I expect the 10-year yield to slip to around 1.70 percent," he added.