U.S. treasuries rose on Tuesday as investors fled to the safe-haven investments following the release of downbeat data about the U.S. economy.

Wholesale inflation jumped sharply in January, with prices excluding food and energy rising 2.3 percent, according to the U.S. Labor Department. The figures were up from expectations of a 0.4 percent increase, according to a poll of analysts and economists by Bloomberg..

Meanwhile, a leading index of consumer confidence fell in February. The Conference Board, a non-profit business group, said Tuesday that its confidence index fell to 75.0 in February, below forecasts, from 87.3 in January.

Ten year treasury notes were up 10/32 to yield 3.871 from 3.91 percent late Monday. Two-year notes rose 5/32 to yield 2.042 from 2.06 yesterday.

A continued slowdown in the U.S. economy may mean that the Federal Reserve will continue to cut interest rates to get the economy moving despite fears that easy access to money will increase inflation.

The Fed's outlook for the U.S. economy is for a slowdown in the first half of 2008 with increased growth in the latter part of the year.

Today's action follows a drop in treasuries yesterday, when a better than expected report on existing home sales dampened concerns about the U.S. economy.