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 US10YT=RR were down nearly 7 basis points to 4.50% by midday in Tokyo and two-year yields US2YT=RR 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. JP/.KSAUD/MKTS/GLOB

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 0#FF: 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.

(Reporting by Tom Westbrook; Editing by Sonali Paul and Edwina Gibbs)

((tom.westbrook@tr.com; +65 6973 8284;))