U.S. Treasurys gained on Thursday after inflation data came in as expected and amid strength in German government debt and overnight demand for safe-haven U.S. debt.
U.S. consumer prices rose by their most in six months in December but were in line with expectations, after producer price data on Wednesday surprised some investors by rising more than expected.
That eased some inflation concerns, after an unexpected drop in Australian employment boosted demand for Treasuries overnight and as German bunds also rallied.
"CPI come in at consensus the market is being dragged up because of the strength in bunds," said Thomas di Galoma, co-head of fixed-income rates at ED&F Man Capital in New York.
Treasurys extended gains after the Philadelphia Fed's index of business conditions in the U.S. Mid-Atlantic region fell to its lowest level since April.
Benchmark 10-year Treasurys were last up 14/32 in price to yield 2.846 percent.
Thirty-year bonds gained 28/32 in price to yield 3.776 percent, down from 3.806 percent. The number of Americans filing new claims for unemployment benefits fell for a second week last week, suggesting a sharp step-down in job growth in December was likely to be temporary.
The Fed will buy between $1 billion and $1.50 billion in bonds due 2036 and 2043 on Thursday as part of its ongoing bond purchase program. Outgoing Fed Chairman Ben Bernanke is due to speak at an event in Washington on Thursday on challenges facing central banks.