By Ira Iosebashvili 

U.S. government-bond prices rose Thursday, as fears of a military standoff in the Persian Gulf sent investors into assets perceived as safe.

The yield on the benchmark 10-year Treasury recently traded at 2.102%, according to Tradeweb, compared with 2.129% Wednesday. Yields fall as bond prices rise.

The yield declines came after two oil tankers were damaged in attacks off the coast of Iran early Thursday, stoking concerns over trade disruptions in the Strait of Hormuz and raising demand for Treasurys and other so-called haven assets.

Signs of muted inflation, together with worries over slowing global growth, have buoyed Treasurys in recent months, driving the 10-year yield down from multiyear highs reached late last year. Muted inflation helps preserve the purchasing power of bonds' fixed payments.

Some analysts said low inflation is giving the Federal Reserve room to lower interest rates, which could lift prices for outstanding bonds and send yields lower still. More than three quarters of economists surveyed by The Wall Street Journal think the central bank's next move will be to cut interest rates, likely before the fall.

"The price action in U.S. rates markets confirms in our minds that the bond bull move remains alive and well," analysts at Citigroup said in a note to clients.

Investors will get a new look in the Fed's thinking next week when the central bank concludes its monetary-policy meeting Wednesday.

The sharp move higher in oil prices also boosted the currencies of some crude exporters. The dollar was recently down 0.1% against the Canadian dollar, while also losing ground against the Brazilian real and Russian ruble.

At the same time, elevated tensions in the Gulf boosted the Swiss franc and Japanese yen, two popular destinations for nervous investors. A cloudy outlook for global growth weighed on emerging-market currencies, taking the dollar higher against the Turkish lira, South African rand and Chilean peso.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.1% to 90.41.

Write to Ira Iosebashvili at ira.iosebashvili@wsj.com

(END) Dow Jones Newswires

June 13, 2019 13:23 ET (17:23 GMT)