NEW YORK (CNN/Money) - U.S. Treasury prices fell Monday after oil prices backed away from record highs and offset weak results from a regional manufacturing survey.

The benchmark 10-year note dropped 9/32 to 99-28/32 to yield 4.26 percent, up from 4.23 percent late last week, and the 30-year bond fell 7/16 of a point to 104-23/32 to yield 5.05 percent, up from 5.01 percent late Friday.

The two-year note shed 1/32 to 100-16/32 to yield 2.47 percent, and the five-year note dipped 1/8 of a point to 100-7/32 to yield 3.44 percent.

Soaring energy costs have supported bonds over the past few weeks, since they tend to act as a tax on domestic consumption, cutting into U.S. economic growth.

With crude prices retreating to $46 a barrel and equity markets making a solid comeback, bonds drifted lower despite a sharp drop in the New York Federal Reserve's index of factory activity.

The severity of the decline in the New York Fed's index led some analysts to trim their estimates for the more influential Philadelphia Fed survey, due later in the week.

The N.Y. Fed's Empire State survey fell to 12.6 in August, a drop of nearly 25 points from July. That was the lowest reading this year and substantially short of analysts' 32.5 forecast.

"An extraordinarily weak figure for August," Drew Matus, senior financial economist at Lehman Brothers told Reuters. "As a result, we are lowering our Philadelphia Fed survey forecast to 18.0." Previously, he had looked for a dip to 30.5 from July's 36.1.

Some of the selling in Treasurys came from hedge funds and traders who bought bonds during last week's $51 billion debt auctions and were cashing in on the gains made since then.

Many traders are also waiting for the July Consumer Price Index Tuesday, fearing a high result could make the Fed more determined to hike interest rates at its three remaining meetings this year.

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Fed officials have argued that the recent softness in the economy was just a passing phase and would not stop it from raising rates at a gradual pace. But fixed-income investors are not entirely convinced.

In the currency market, the dollar was mixed against the euro and the yen. The euro bought $1.2363, down from $1.2372 late Friday. The dollar bought ¥110.46, down from ¥110.7 late Friday.  

--from staff and wire reports