NEW YORK: US Treasury yields plunged on Tuesday, in line with the European market, after European Central Bank President Mario Draghi hinted at more stimulus if regional inflation fails to pick up toward its target.

U.S. benchmark 10-year yields fell to their lowest since early September 2017, while 30-year yields hit their weakest since late October 2016.

"(We) will use all the flexibility within our mandate to fulfill our mandate - and we will do so again to answer any challenges to price stability in the future," Draghi said on Tuesday.

German bond yields hit record lows deep in negative territory, and French 10-year yields turned negative for the first time since at least 1985 after Draghi's comments.

"Draghi was extremely dovish and this had a big impact on Treasuries as we anticipate the Federal Reserve," said Ellis Phifer, market strategist at Raymond James in Memphis, Tennessee.

The Fed will not cut rates this month, or be as dovish as Draghi, he added. "I think there are still signs that the United States is stronger than Europe, but obviously Europe becomes an issue for global growth if it continues to decline."

The Fed starts its two-day meeting on Tuesday. Analysts expect the Fed to hold interest rates steady at the meeting, but think it could alter its rate forecasts and change its language to set the stage for possible easing this year.

In afternoon trading, U.S. 10-year note yields fell to 2.056% from 2.086% late on Monday, after reaching 2.016%, the lowest since September 2017.

Yields on U.S. 30-year bonds dropped to 2.556%, from 2.547% on Monday. Earlier, 30-year yields dropped to a nearly 2-1/2-year trough of 2.513%.

At the short end of the curve, U.S. 2-year yields were down slightly at 1.862% from Monday's 1.865%.

Since the year began, both 10-year and 2-year yields have fallen around 63 basis points, on track for their steepest decline since 2014 and 2008, respectively.

John Bellows, portfolio manager at Western Asset, said the Fed's low-inflation focus creates an "unmistakably dovish backdrop" for monetary policy and has contributed to lower bond yields this year.

"The current market pricing of Fed hikes is consistent with a worse outcome for growth and inflation than we expect," he said. "The low inflation backdrop will limit any upward movement of yields."

U.S. Treasury prices earlier rallied in response to a U.S. announcement on Monday that Washington would deploy 1,000 more troops in the Middle East, citing concerns about a threat from Iran. On Tuesday, Iran said it would not wage war against any nation.