(Updates with trading in the Asia session)

SINGAPORE, Feb 3 (Reuters) - Treasuries rallied on

Monday as impending U.S. tariffs on Canada, Mexico and China

drove investors into safe assets despite trepidation about

inflation risks.

Ten-year U.S. Treasury yields were down

nearly 7 basis points to 4.50% by midday in Tokyo and two-year

yields unwound an initial rise to be steady at 4.24%.

Treasury futures saw some early selling but were firmer

by midmorning, as were bond markets around Asia.

The overall market mood was jittery.

"Markets are less sure how to price growth versus inflation,

when it comes to tariffs," said Vishnu Varathan, head of macro

research for Asia outside Japan at Mizuho Securities in

Singapore.

"I expect it to get bumpy. There's so much tension and

uncertainty, markets don't know which way to price it ... it

really wouldn't surprise me if yields need to have a huge

repricing one way or another."

Tariffs, in theory, slow growth which ought to support

bonds. However, they also raise prices and potentially give

companies cover for further price hikes or for consumers to

start to expect price rises and press for higher wages.

Fed funds futures fell slightly in the Asia morning

to reflect doubts on the depth of future rate cuts. Futures are

roughly pricing a 54% chance of two cuts this year and 44% for

just one.

"Increased U.S. tariffs underscore our view 10-year

Treasury yields will rise to 5% as a second Trump term boosts

inflation," said, Mansoor Mohi-uddin, chief economist at Bank of

Singapore, the private banking arm of OCBC Bank.