NEW YORK (CNN/Money) - Treasury prices jumped Tuesday after dual government reports offered analysts some relief from inflation fears.

The dollar lost ground to the euro and yen.

The benchmark 10-year note climbed 19/32 of a point to 98-13/32 to yield 4.20 percent, down from 4.27 percent late Monday.

The 30-year bond surged 1 and 7/32 points to 112-22/32 to yield 4.54 percent, down from 4.60 percent Monday. Bond prices and yields move in opposite directions.

Shorter-dated debt also posted solid gains, with the five-year note adding 12/32 of a point to 100-24/32 to yield 3.83 percent, while the two-year added 3/32 of a point to 100-16/32, yielding 3.49 percent.

Housing starts posted their steepest drop in more than 14 years, suggesting some cooling in the housing market, a Commerce Department report showed Tuesday.

March housing starts fell to a 1.837 million unit rate from an upwardly revised 2.229 million unit pace in February. The 17.6 percent decline marked the largest monthly drop since January 1991.

Wall Street economists had expected housing starts to drop a far smaller 4.8 percent in March to a 2.09 million unit rate from the 2.195 million unit clip initially reported for February.

The Producer Price Index, the government's key measure of wholesale prices, rose 0.7 percent in March, compared to the 0.4 percent increase seen in February. Economists surveyed by Briefing.com had forecast a 0.6 percent rise in March.

The so-called core PPI, which excludes often volatile food and energy prices, gained 0.1 percent. Economists had forecast a 0.2 percent rise in the core PPI in March.

The core measure is considered more important for monetary policy and added to speculation the Federal Reserve would not have to be more aggressive in raising interest rates.

"On the whole this will assuage some of the concern that's been bubbling up about inflation since the start of the year and should keep the Fed on its measured path for now," Richard Dekaser, chief economist at National City Corp. in Cleveland, told Reuters.

Also helping to ease inflationary fears was the Redbook survey of April retail sales, which the company said were running 3.8 percent below March levels and called "disappointing."

Inflation hurts bonds as it erodes the value of the fixed-income investment.

In currency trading, the euro bought $$1.3073, up from $1.3015 late Monday. The dollar bought ¥106.76, down from ¥107.56.

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