Bond prices rose amid news of continued low inflation and steady retail sales.

Consumer prices rose two-tenths of a percent in May, showing continued modest inflation, and trade figures showed improvement.

"While the effects can be uncomfortable, the effects of continued high inflation can be much worse."

Mr. Fine said that confidence about continued low inflation had played a key role in pushing bond yields to near-21-month lows.

He added, "It's a very good omen to see a pattern of continued low inflation with solid economic growth."

In the past, the bond market has often rallied on such reports, with their portents of continued mild inflation.

He also said that data showing continued low inflation make the longer end of the bond market a little more attractive.

There are numerous signs of continued moderate inflation in the United States.

She said that an unfavorable index "will not alter our outlook for continued low inflation."

Many retired city employees complain that their pensions have been frozen since 1995 despite continued inflation.