NEW YORK (CNNfn) - Treasury bonds ended higher Thursday for the fourth consecutive session after a slew of strong economic reports, including U.S. producer prices, failed to confirm investors' worst fears on inflation.
"All the data still points to a strong economy," said David Horner, senior financial strategist at Merrill Lynch. "But traders are looking beyond the strength to some slowdown in the future."
Shortly after 3 p.m. ET, the 30-year bond rose 14/32 to 102-26/32. Its yield, which moves inversely to its price, fell to 6.04 percent from 6.07 percent Wednesday. The 10-year Treasury note gained 8/32 to 101-25/32, its yield falling to 6.25 percent from 6.28 percent Wednesday.
Investors digest strong data
The Producer Price Index (PPI), which measures inflation at the wholesale level, jumped 1 percent in February, according to the Labor Department. The sharp increase represents the largest gain in more than nine years, and was attributable to higher energy prices.
The report was well above Wall Street forecasts for a 0.6 percent increase and January's unchanged level. But the core rate, excluding volatile food and energy prices, rose 0.3 percent, in line with forecasts.
The inflation news follows Tuesday's strong U.S. retail sales data, a 1.1 percent increase in February against an upwardly revised 0.4 percent increase in January, according to the Commerce Department.
Bill Quan, senior economist at Aubrey G. Lanston, said the reports alleviated some fears of aggressive rate hikes by the Federal Reserve, noting investors had been nervous about the retail sales and PPI reports, as well as Friday's Consumer Price Index.
Other economic reports had little market impact as the PPI data took the spotlight. U.S. housing starts rose 1.3 percent to an annual rate of 1.78 million units, while building permits fell to 8 percent to 1.63 million.
U.S. weekly jobless claims fell 19,000 to 262,000, reflecting a tight labor market. Lastly, the Philadelphia Fed index, which measures business activity in the region, soared to 25.0 in March from 13.3 in February, the biggest increase since July 1996.
Michael Boss, bond futures broker at IBJ Lanston Futures, was bullish about the market. He told CNN's Before Hours he expects Treasury prices to move higher, given current technical levels. (176.4 WAV) (176.4K AIFF)
However, from a fundamental viewpoint, Mark Mahoney, co-head of government trading at Warburg Dillon Read, was bearish. "The fundamentals will win, and the market will head south," he said.
Analysts widely expect the Federal Reserve to hike rates by a quarter point at Tuesday's monetary policy meeting, bringing the fed funds rate, the rate banks charge each other for borrowing money, to 6 percent.
The Fed has increased short-term interest rates four times since June in an effort to slow the economy and keep inflation at bay. However, consumer spending and confidence remain strong.
Buyback program continues
The U.S. Treasury purchased $1 billion in outstanding bonds Thursday in the second leg of its buyback program to reduce the nation's debt. The Treasury paid $1.27 billion for maturities between May 2018 and November 2021. The average weighted yield of the securities was 6.36 percent.
Faced with a budget surplus, the Treasury announced plans in late January to reduce the issuance of long-term debt by as much as $30 billion. The operations are conducted by the Federal Reserve. Last week's initial phase marked the first time in 70 years the government has repurchased national debt.
Dollar dips vs. euro
The dollar fell slightly against the euro and was virtually flat against the yen Thursday. Shortly after 3 p.m. ET, the euro traded at 97.09 cents, up from 96.59 cents Wednesday, a 0.5 percent loss in the dollar's value.
The dollar changed hands at 105.58 yen, down from 105.59 yen Wednesday. 
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