The remarks by the president of the New York Fed, John Williams, that policymakers cannot afford to keep their "powder dry" and wait for potential economic problems to materialize in those circumstances come less than two weeks before the Fed's next policy meeting.

In recent weeks, Fed policymakers have identified a host of concerns they think could end what is now the longest US economic expansion on record. Chief among those concerns include the prolonged US-China trade war, which is denting business confidence, a global manufacturing slowdown and inflation below the Fed's target of 2% a year.

Benchmark 10-year notes were last up 7/32 to yield 2.038%, down from 2.061% late Wednesday.

The US central bank is seen as certain to cut rates on concerns about global growth when it meets on July 30-31.

"We haven't really seen global growth pick up in a material way, trade volumes are still quite low, there are certainly dark clouds on the horizon and those have not gone away," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.

Interest rate futures traders are now pricing an equal probability of the Fed's cutting its rate by 25 basis points or 50 basis points, according to the CME Group's FedWatch tool.

Yields rose earlier on Thursday after data showed that a Philadelphia manufacturing index rebounded strongly in July, adding to recent data that shows an improving US economy.

The Philadelphia Fed said factory activity in the mid-Atlantic region reached its highest level in a year, following other recent surveys on manufacturing that have suggested the struggling sector was stabilizing.

Yields have risen from more than 2-1/2-year lows reached earlier this month, and the yield curve has steepened as jobs, inflation and retail sales data show that the US economy is improving.

The yield rise has been capped, however, by dovish global central bank policy.

The euro and government bond yields across the single currency bloc fell on Thursday, following a report by Bloomberg News that European Central Bank staff are studying a potential change to the bank's inflation goal of "near 2%."

The report quoted sources as saying ECB staff were studying the bank's approach informally, including whether a more flexible target might be more appropriate in the post-crisis era - potentially allowing inflation to stay higher for a certain time.