By Sam Goldfarb 

U.S. government bond prices ticked lower Thursday as traders responded to better-than-expected data on regional manufacturing activity.

In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 2.738%, according to Tradeweb, compared with 2.729% Wednesday.

Yields, which rise when bond prices fall, edged higher after the Federal Reserve Bank of Philadelphia's Manufacturing Business Outlook Survey's index of business activity rose to 17.0 in January from 9.1 in December. Economists surveyed by The Wall Street Journal had expected a reading of 8.0.

Short-term Treasury yields, such as the yield on the two-year note, rose more than longer-term yields following the report, as traders bet the strong data could lead to tighter monetary policy from the Federal Reserve.

Some investors believe short-term Treasury yields have room to rise in the coming months as traders raise their expectations for short-term interest rates set by the Fed.

Investors in Treasurys are probably "too pessimistic at this point" about the economy, said Zhiwei Ren, portfolio manager at Penn Mutual Asset management Inc.

Growing evidence that the Fed isn't going to cut rates in the near future could cause short-term yields to rise, Mr. Ren said. At the same time, yields on longer-term Treasurys will likely be contained "by slower global growth and lower inflation," he added.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

(END) Dow Jones Newswires

January 17, 2019 11:01 ET (16:01 GMT)

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