By Min Zeng 

U.S. Treasury bonds strengthened Tuesday and were set for the fifth straight quarterly price gain, the longest winning streak in more than a decade.

Demand perked up as investors tweaked their portfolios to prepare for the end of the first quarter. Fund managers also bought bonds to match the month-end adjustments of their benchmark bond indices.

In recent trading, the yield on the benchmark 10-year Treasury note was 1.95%, compared with 1.959% on Monday, according to Tradeweb.

When bond prices rise, their yields fall.

The yield fell from 2.173% at the end of 2014. The last time the yield fell for five quarters in a row was back in March 2001.

The Treasury bond market overall has handed investors a total return--including price change and interest payments--of 1.48% this year through Monday, following 5.05% return last year, according to Barclays PLC.

But lower yields mean lower income. With yields near historical lows, analysts have warned that if sentiment on the bond market sours, bondholders are vulnerable for capital losses.

Investors scooped up ultrasafe U.S. government bonds due to an uncertain growth outlook overseas, subdued inflation in the developed world and mixed economic readings in the U.S. amid a harsh winter in east coast. Adding to U.S. bonds' charm: they offer much more attractive yields compared with government debt sold by Germany, Japan, the U.K. and France.

The European Central Bank launched its bond buying program earlier in March which is expected to run through September 2016. The monetary stimulus has sent government bond yields in the eurozone to record lows this quarter with many yielding below zero, which has driven buyers into U.S. Treasury bonds for higher income.

"The yield differential between the U.S. and the rest of the world continues to drive foreign buyers into Treasury bonds," said Thomas Roth, executive director in the U.S. government bond trading group at Mitsubishi UFJ Securities (USA) Inc. in New York. "Domestic investors become convinced by Federal Reserve officials that these low yields are here to stay."

On Tuesday, the yield on the 10-year German government bond was 0.191%, the yield on the 10-year government bond in Japan was 0.398% and the yield on the U.K. government debt was 1.573%.

The mixed outlook has cast doubt over whether the Fed could start raising short-term interest rates this June. Higher short-term interest rates could dent the value of outstanding bonds, as buyers are likely to flock to new bonds issued at higher yields.

The prospect of the Fed waiting longer to tighten monetary policy has encouraged investors to buy bonds. Many investors still see a very low probability for the Fed to raise rates this summer.

The federal-funds futures, used by investors and traders to place bets on central-bank policy, showed Tuesday that the market sees a 6% likelihood of a rate increase in June, unchanged from Monday, according to data from CME Group.

Fed Chairwoman Janet Yellen said Friday the timing hinges on how the economy performs in the months ahead. She said the tightening cycle this time would be gradual. The Fed last raised interest rates in 2006. It has kept the fed-funds target rate near zero since December 2008.

The nonfarm payrolls report for March due this Friday is the key datapoint to shape up investors' expectations on the timing of the first interest-rate increase by the Fed in nearly a decade. The Fed's next policy meeting is set for April 28-29.

Economists polled by The Wall Street Journal expect the U.S. economy to have added 248,000 new jobs in March, after a net gain of 295,000 in February. The unemployment rate is expected to have stayed unchanged at 5.5%.

"I do think the U.S. economic numbers will show some improvement and bond yields will be slightly higher in coming months," said Larry Milstein, head of government and agency trading at R.W. Pressprich Co. in New York. "I do not anticipate a major move higher in yields."

Write to Min Zeng at min.zeng@wsj.com

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