The situation in Iran has added further uncertainty, putting pressure on U.S. Treasury bonds, with the 10-year yield rising by more than 5 basis points.

U.S. Treasury yields rose broadly on Friday, despite unexpectedly weak retail sales data and relatively mild inflation figures. The U.S. government's indication that it may maintain a maritime blockade on Iranian ports "indefinitely" heightened market concerns about geopolitical and inflation risks, leading to a sell-off in long-term Treasuries. As an important benchmark for U.S. government borrowing costs, the yield on the 10-year Treasury rose more than 5 basis points to 4.696%; the yield on the 2-year Treasury, which is more sensitive to the Fed's short-term interest rate policy, increased about 3 basis points to 4.171%; and the yield on the 30-year Treasury rose nearly 6 basis points to 5.267%. Bond prices move inversely to yields. The U.S. consumer data released on the same day was significantly weaker than expected. Retail sales in July fell 0.6% month-on-month, while economists surveyed by Dow Jones had previously anticipated a 0.1% increase. The weak consumer data further indicates that demand in the U.S. economy may be cooling, reducing market expectations for further short-term rate hikes by the Fed. However, geopolitical risks have re-emerged as a focal point for the bond market. U.S. Treasury Secretary Yellen stated in an interview that the U.S. may take new measures to further economically isolate Iran, and indicated that the related measures would reach "unprecedented" levels, which momentarily drove Treasury yields sharply higher. Earlier, U.S. Defense Secretary Austin also stated that the U.S. military could maintain a maritime blockade of Iranian ports "indefinitely." This statement suggests that the U.S.-Iran conflict and energy supply risks may persist longer, prompting the market to reassess the potential impact of the geopolitical situation on oil prices, inflation, and long-term U.S. interest rates. From the inflation data released this week, it appears that price pressures in the U.S. have actually eased somewhat. The Producer Price Index (PPI) for July was flat month-on-month, below the market expectation of a 0.2% increase; the previously released Consumer Price Index (CPI) was also relatively mild, overall aligning with economists' expectations. ING strategists noted that the overall U.S. inflation data this week was well-controlled, which is a positive signal for the U.S. Treasury market and indeed alleviated further upward pressure on interest rates. However, the factors keeping yields elevated have not completely disappeared; real yields remain high and may continue to hold at elevated levels. Currently, the U.S. bond market is being pulled by two forces: on one hand, the weakness in retail sales and the easing of inflation pressures reduce the necessity for further Fed rate hikes; on the other hand, the persistently tense situation between the U.S. and Iran brings energy and inflation risks, as well as high long-term real rates, which still exert pressure on long-term Treasuries. On Friday, the increase in the 30-year yield was greater than that of the 2-year yield, indicating that market pressure is more concentrated on long-term bonds.