U.S. Treasuries gained again today, pushing higher in tandem with the stock market.

A day after the

Federal Reserve cut interest rates by half a percentage point, the 10-year

benchmark note gained 8/32 to 96 17/32, yielding 5.460%. The 30-year bond, also known as the long bond, gained 13/32 to 93 5/32. Its yield, which moves inversely to price, fell to 5.863%.

The gains weren't a given. "It's ... surprising that we're moving up, and not counter, to the stock market." said Gib Clark, trading manager at

Zions First National Bank

. "It's surprising, given the Fed has administered such a strong dose to get the economy going and that they said they'd do more if needed to." In its statement yesterday accompanying the rate cut -- its fifth since the year began -- the Fed made it clear it would cut rates again if necessary in its bid to keep the economy growing.

Stocks and bonds tend to move in opposition, since the incentive to trade in equities lessens the draw of fixed-income securities and vice versa. But not today.

Economic data out this morning helped set the stage for the gains in both stocks and bonds. The latest data on the

Consumer Price Index

showed that the prices consumers paid for goods and services in April rose

at a slower pace than economists had expected. The index rose 0.3% last month, a bit lower than the 0.4% rise that was anticipated. Excluding volatile food and energy sectors, prices rose in line with expectations, gaining 0.2%.

Since the CPI data was seen as benign to the markets -- since it didn't raise a red flag about inflation -- it helped the bond market. This boost may have been a factor that encouraged stock investors to rally, said Tony Crescenzi, chief bond market strategist at

Miller Tabak

. Crescenzi, however, said he thinks inflation is still a problem.

The

Dow Jones Industrial Average rose more than 300 points on Wednesday, putting it solidly above the psychologically key 11,000 mark. It hasn't closed above 11k since Sept. 14, 2000.

The two-year Treasury note -- which tends to react most dramatically to Fed cuts -- traded up 1/ 32 to 99 17/32, lowering the yield to 4.239%.

Shorter maturities have been outperforming the longer end of the market, resulting in a steepening yield curve. The yield curve tracks the difference in yield between two separately dated securities, like the two-year note and the 10-year note. Analysts believe the recent weakness in the longer-dated securities, which are most sensitive to the threat of inflation, reflect concern that the economy may face higher prices in the future. Still, yesterday, the Fed said the threat of recession is greater than the risk of inflation.

Despite the gains in the bond market today, Treasuries are slightly lower than the highs hit after the Fed announced its rate cut yesterday. And bond investors may still be in a bit of waiting mode. The bond market, Clark said, "is just watching and waiting, and putting together the pieces ... It's seeing if the economy is going to fall or pick back up. If the market develops a clearer view of that, it'll trade more actively."