Treasury real yields were down sharply on Tuesday as traders hedging against the possibility of rising inflation scooped up inflation-linked securities, while they also bought conventional debt as a low-risk investment. The benchmark 10-year yield was down 6.6 basis points at 1.4306% in midday trading. The yield on 10-year Treasury Inflation Protected Securities was at -1.195%, the lowest since early August, and the yield on 30-year TIPS touched a record low of -0.586%. The growing demand for TIPs indicated more concerns about inflation taking hold among investors. The U.S. Federal Reserve this month will begin to remove the first pillar of extraordinary stimulus it introduced in March 2020 to shield the economy from the COVID-19 pandemic, when it starts to taper its massive bond purchases. There is growing debate over how much longer high inflation can be tolerated. Some of the decline in yields came after the U.S. Labor Department said producer prices increased solidly in October. Traditionally that might push up yields, said Stan Shipley, managing director for Evercore ISI, but the continued buying showed investors still interested in safe U.S. securities. "People are sitting here unwilling to take risks," he said. The Treasury Department was scheduled to auction $39 billion of 10-year notes at midday on Tuesday, followed by an auction of $25 billion worth of 30-year bonds on Wednesday. Wednesday is also the scheduled release date for consumer price index data, which will be closely watched as a gauge of inflation. Priya Misra, global head of rates strategy for TD Securities, said another factor influencing Tuesday"s trading included a sense that non-U.S. central banks are feeling less hawkish pressure, leading to buying overseas. Germany"s 10-year inflation-linked bond, which reflects the so-called real yields, fell to a record low of -2.09%. Misra also noted a recent report that U.S. President Joe Biden met with Fed Governor Lael Brainard as a potential next Fed Chair. She would be considered a dovish pick. The bond buying pushed down a closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations. It was about three basis points lower at 102 basis points, its lowest since Oct. 28. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 3.2 basis points at 0.4168%. November 9 Tuesday 11:42AM New York / 1642 GMT Price Current Net Yield % Change (bps) Three-month bills 0.045 0.0456 0.000 Six-month bills 0.06 0.0609 -0.005 Two-year note 99-235/256 0.4168 -0.032 Three-year note 100-22/256 0.721 -0.038 Five-year note 100-58/256 1.0781 -0.042 Seven-year note 100-94/256 1.3197 -0.057 10-year note 98-92/256 1.4306 -0.066 20-year bond 98-128/256 1.8408 -0.067 30-year bond 104-120/256 1.8052 -0.083 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 20.50 1.25 spread U.S. 3-year dollar swap 17.00 -2.50 spread U.S. 5-year dollar swap 8.50 -0.25 spread U.S. 10-year dollar swap 2.50 0.00 spread U.S. 30-year dollar swap -20.75 0.25 spread (Reporting by Ross Kerber in Boston; Editing by Mark Heinrich and Andrea Ricci)