NEW YORK (CNNfn) - Treasury securities rose Wednesday after the latest piece of economic data showed retail prices barely budged in May, sparking hope that the Federal Reserve won't hike interest rates when it meets in two weeks.
In currency markets, the dollar edged lower against the yen and euro.
The consumer price index gained 0.1 percent last in May. The data, below Wall Street expectations, come amid a string of evidence showing the economy cooled last month.
"We are largely out of the woods with the June meeting," said Bill Kirby, head of government trading at Prudential Securities, referring to the unlikelihood of a rate hike June 28.
Investors betting that rates won't rise bought Treasurys, whose prices fall as rates go higher.
Just before 3 p.m. ET, the price of the 10-year note rose 12/32 to 103-6/32. Its yield, which moves inversely to its price, fell to 6.05 percent from 6.10 percent Tuesday. The 30-year Treasury bond gained 16/32 to 104-25/32, its yield falling to 5.91 percent from 5.94 percent Tuesday.
 Still, Kirby forecasts limited bond gains in the weeks ahead as the focus shifts to the next Fed meeting in August, when the rate-hike picture is less focused.
Unlike May's, June's inflation numbers likely will be affected by rising gas and oil prices. The price of a barrel of oil moved above $33 Wednesday.
"There's a sense that next report will see a jump in energy prices," said John Lonski, bond market analyst at Moody's Investors Service
That would come in contrast to recent numbers suggesting the Federal Reserve's six interest rate hikes in the last 12 months are taking effect. Retail sales fell 0.3 percent in May, the government said Tuesday, and producer prices for May came in flat last Friday.
In its periodic tally of the economy's health, the Federal Reserve Wednesday said there appears to be some slowing. But the beige book report also warned that the nation's tight labor markets could lead to wage inflation.
"The Fed's beige book contains a little something for both the bull and bear camps but has a marginally negative tone to it," said Tony Crescenzi, bond strategist at Miller Tabak & Co.
Dollar softens
The dollar edged lower against the yen and euro Wednesday on continued expectations that interest rates will hold steady this month.
Just before 3 a.m. ET, the euro rose to 95.97 cents from 95.84 cents Tuesday. The dollar fell to 106.76 yen from 106.90 Tuesday.
Alex Ruesch International linked the yen's gains to comments by Bank of Japan Governor Masaru Hayami. "Without being specific, (he) indicated once again that the end of the zero-interest rate policy is nearing," Ruesch market analyst Alex Beuzelin wrote in a note to clients.
If the U.S., the world's largest economy, is in fact slowing, money might move into faster-growing countries. That shift means dollars are sold in exchange for other currencies such as euros.
The euro has been gained in the past few weeks after falling below 90 cents this spring. Still, the regional currency is well below the $1.16 mark where it began trading in January 1999. 
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