NEW YORK (CNN/Money) - Treasury prices inched higher Friday, bolstered by a surprise drop in consumer confidence and a report suggesting Fed Chairman Alan Greenspan was less concerned about inflation than some of his colleagues.

The session's gains were modest and concentrated in shorter maturities, which were benefiting from an unwinding of curve-flattening trades that have been quite popular lately.

The benchmark 10-year note rose 7/32 of a point to 100-26/32 to yield 4.15 percent, down from 4.16 percent late Thursday. The 30-year bond gained 3/32 of a point to 110-28/32 to yield 4.65 percent, unchanged from Thursday. Bond prices and yields move in opposite directions.

The two-year note gained 2/32 of a point to 99-23/32, yielding 3.16 percent, while the five-year note added 7/32 of a point to trade at 99-30/32, yielding 3.64 percent.

In the currency market, the U.S. dollar regained strength against the Japanese yen but still was weaker against the euro.

The dollar bought ¥102.73 in late afternoon trading, down from ¥103.33 late Thursday. The euro bought $1.3050, up from $1.2974 late Wednesday.

Pronouncements from two top Federal Reserve officials, Gary Stern of Minneapolis and Richard Lacker from Richmond, failed to shed any fresh light on the outlook for monetary policy.

But Fed Governor Susan Bies said she foresaw a moderation of inflationary trends, which would allow the Fed to continue being "measured" in raising interest rates.

Even more important to the market was a report in BusinessWeek that cited "associates" of Alan Greenspan as saying the Fed chief was happy to continue raising interest rates at a steady but moderate pace.

"It's all about these Fed guys sort of nullifying everything that was said in the minutes," one trader at a U.S. primary dealer told Reuters.

Minutes from the central bank's December meeting indicated many policy-makers were growing anxious about price increases and hinted at the possibility of a more aggressive monetary tightening.

But statements from top Fed officials have undone the damage to prices by soothing worries that the central bank might move toward rate hikes of a half percentage point later in the year.

Investors also found comfort on Friday in consumer sentiment figures from the University of Michigan. They suggested that after shopping in earnest during Christmas, Americans were starting to worry about having to pay off their bills.

"They shopped and now they dropped," said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi in New York, observing that consumers' personal savings rates are low and people may have felt overextended.

The preliminary reading of consumer confidence for January dipped to 95.8 from December's 97.1, befuddling analysts who were anticipating a modest rise to 98.0.