U.S. Treasury bonds fell in price Wednesday as the economy showed further signs of recovery. The yield on the 10-year Treasury note rose to 4.27%, up from 4.23% late Tuesday.

The decline in bond prices reflects investor expectations that a stronger economy could lead to higher inflation and, consequently, higher interest rates. Recent economic data, including reports on manufacturing activity and employment, have pointed to a robust recovery.

The Institute for Supply Management’s manufacturing index rose to 58.6 in December, its highest level in several months. Meanwhile, the Labor Department reported that initial jobless claims fell last week, suggesting improvement in the labor market.

These positive economic signals have led investors to anticipate that the Federal Reserve may begin to raise interest rates sooner than previously expected. Higher interest rates tend to make bonds less attractive, as they reduce the present value of future cash flows.

Analysts are closely watching upcoming economic data releases, including the December jobs report, for further indications of the economy’s strength and the Fed’s likely course of action.

The bond market’s reaction underscores the sensitivity of fixed-income securities to changes in economic conditions and monetary policy expectations.