NEW YORK (CNNMoney.com) - Bonds jumped Tuesday after a string of economic reports came in weaker than expected.

The dollar fell versus the yen and euro.

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The benchmark 10-year note rose 13/32 to 99-21/32, yielding 4.54 percent, down from 4.59 late Monday.

The 30-year bond added 23/32 to 99-30/32, yielding 4.50 percent, down from 4.55 in the previous session. Bond prices and yields move in opposite directions.

The five-year note gained 8/32 to yield 4.59 percent, and the two-year note moved higher three ticks to yield 4.67 percent.

A report issued Tuesday morning showed that business activity in the Midwest grew at a slower pace in February. The Chicago Purchasing Management Index fell to 54.9 in February from 58.5 in January.

Slowing home sales also helped prop up bonds. A report released by the National Association of Realtors said existing home sales cooled slightly in January to an annual rate of 6.56 million, compared with the revised 6.75 million pace posted for December. (Full story.)

Investors have been closely watching the real estate market for signs of a cool down, as much of the nation's economic growth has been tied to the housing boom.

Also underscoring softness in the economy was a report that showed gross domestic product, the broadest measure of the nation's economic activity, slowed to its weakest pace in three years during the fourth quarter.

The government revised the annual rate of growth during the period to 1.6 percent, which was slightly stronger than the 1.1 percent pace originally reported, but still well below the 4.1 percent rate posted in the third quarter. (Full story.)

A survey conducted by the Conference Board also showed consumers are worried about a slowdown in the economy. The group's index of consumer sentiment fell to 101.7 in February, down from 106.8 in January.

Treasuries rallied on the reports as traders bet that signs of an economic slowdown could convince policymakers to soon bring an end to the central bank's measured campaign of short-term interest rate hikes.

Although the reports issued Tuesday point to slowing growth, upcoming reports are likely to offer a more upbeat outlook, according to Tony Crescenzi, chief bond market strategist at Miller Tabak.

"Despite the weakness, the reports do not appear to signal any meaningful downshift in economic growth, nor do the data suggest that the Fed can take a breather from its rate hikes," he wrote in a research note.

He expects the Fed to raise rates at its March meeting and again in May. The Fed has raised rates 14 consecutive times since June 2004 in an effort to keep inflation at bay.

In currency trading, the dollar lost ground on the day's weak economic data.

The dollar bought ¥115.78, down from ¥116.08, late Monday, while the euro bought $1.1926, up from $1.1846 in the previous session.

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