NEW YORK (CNNMoney.com) - Treasury prices were flat Wednesday after investors shrugged off a slew of economic reports.

The dollar lost ground against the euro and yen.

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The benchmark 10-year note fell 1/32 to 101-9/32 to yield 4.33 percent, unchanged from late Tuesday, and the 30-year bond rose 1/32 to 112-27/32 to yield 4.51 percent, little changed from the previous session. Bond prices and yields move in opposite directions.

The two-year note was flat, yielding 4.33 percent, while the five-year note was also unchanged, yielding 4.27 percent.

Economic activity increased across the country in the last several weeks of 2005, but rising energy costs worried businesses in some areas, the Federal Reserve said in its "Beige Book" summary of economic conditions.

Fed Governor Susan Bies said the economy was expanding solidly, but the Fed remained "vigilant" for any sign of deterioration in the inflation outlook.

The Labor Department reported Wednesday that consumer prices fell a surprisingly tame 0.1 percent due to higher energy, transportation and apparel costs. Stripping out energy and foods costs, the index rose 0.2 percent.

But year-over-year core inflation numbers climbed 2.2 percent, and which some investors and analysts say is above the Federal Reserve's comfort range for price increases.

"The year-on-year was (up) 2.2 percent. That is a change and that is worrisome for the Fed. You would expect a bit of a sell-off in the bond market," Kurt Karl, head of economic research at Swiss RE in New York, told Reuters.

Bond traders fear inflation since it erodes the value of fixed-income investments.

Investors have been speculating that the Fed's 18-month-old rate hike campaign to rein in inflation was drawing to a close, and Wednesday's CPI numbers probably did little to change that overall view.

Still, the normally upward-sloping yield curve has flattened again in recent sessions as shorter dated debt yielded as much as the benchmark 10-year note.

Investors have been closely watching the yield curve because the past two recessions have been preceded by an inversion, when short rates exceed long rates. But many analysts say the inversion probably points to an economic slowdown rather than a recession in 2006.

In currency trading, the euro bought $1.2108, up slightly from $1.2105 late Tuesday. The dollar bought ¥115.23, down from ¥115.43 in the previous session.

--from staff and wire reports

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