Exchange traded funds (ETFs) that invest in U.S. Treasury bonds rallied Friday after the government reported consumer-price data that showed inflation didn’t rise as much as some analysts had expected in March.

The iShares Barclays 20+ Year Treasury Bond Fund  (NYSEArca: TLT) was up nearly 1% in midday trading and the ETF has risen back above its 50-day moving average.

“The Fed has more breathing room,” Suvrat Prakash, an interest-rate strategist, told Dow Jones Newswires.

“The [inflation]report was a bit of relief for those who have been nervous about inflation,” said Prakash, adding that one month’s data isn’t a trend and that core CPI has been rising in recent months, according to the report.

Growing fears about Europe’s debt crisis also fueled buying of U.S. Treasury bonds in a safe-haven trade, MarketWatch reported.

ProShares UltraShort 20+ Year Treasury ETF (NYSEArca: TBT), an ETF that provides leveraged short exposure to bonds, was down nearly 2% and was among the most active ETFs Friday by share volume. PIMCO’s Bill Gross recently initiated a short position in U.S. debt, according to reports.

iShares Barclays 20+ Year Treasury

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.