Treasury prices rose Tuesday after a gauge of consumers' confidence in the economy plunged to the worst level since April 2009.
The Conference Board's index of consumer confidence sank to 44.5 in August from 59.2 in July. That's the lowest it has been since two months before the recession ended.
The decline reflects Americans' jitters during a month of wild stock market swings, instability in the European financial system and a weakening global economy. Consumers' views are crucial for the U.S. economy because their spending accounts for 70 percent of all economic activity.
In afternoon trading, the 10-year Treasury note rose 53 cents for every $100 invested. Its yield fell to 2.18 percent from 2.27 percent late Monday.
Separately, the Federal Reserve said that some officials had argued this month for more aggressive action to boost the economy. One option is a third round of bond-buying aimed at lowering long-term interest rates.
During the Aug. 9 meeting of the Fed's main policy-making group, some members pressed for bold intervention, according to the minutes released Tuesday. They settled on a plan to keep short-term rates near zero for two more years. The committee agreed to spend an extra day discussing its next steps at its September meeting.
Interest rates for loans such as mortgages tend to track the yield on the 10-year Treasury note. The Fed can try to lower rates by increasing demand for notes, pushing their prices higher. Bond yields fall as their prices rise.
Lower rates on consumer loans have done little to increase spending by consumers or revive the weak housing market. Higher rates would make it even harder to get loans. That might kill what little momentum the economy has.
The price of the 30-year bond rose $1.16 for every $100 invested. Its yield fell to 3.52 percent from 3.61 percent.
The yield on the two-year note fell to 0.20 percent from 0.21 percent.
The yield on the three-month T-bill was 0.01 percent. Its discount wasn't available.