10-year Treasury yield inches higher as traders digest soft retail sales, monitor the Middle East

The 10-year U.S. Treasury note yield rose on Friday after the latest retail sales figures missed expectations and the U.S. said its naval blockade of Iranian ports could continue "indefinitely."

The 10-year yield — the key benchmark for U.S. government borrowing — rose about 5 basis points to 4.692%.

The 2-year Treasury note yield, which more closely tracks short-term Federal Reserve interest rate policy, added 2 basis points to 4.161%%. The longer-dated 30-year Treasury bond yield advanced more than 5 basis points to 5.267%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

Retail sales surprisingly fell in July, dropping 0.6%. Economists polled by Dow Jones had called for a 0.1% rise.

Yields initially jumped after U.S. Treasury Secretary Scott Bessent's comments in an interview with Newsmax, in which he warned of fresh measures aimed at the "economic isolation" of Iran which "have never been seen."

Bessent's comments follow U.S. Defense Secretary Pete Hegseth telling reporters that U.S. forces could maintain an indefinite blockade of Iranian ports. 

The producer price index, which measures what wholesalers pay for raw goods and materials, was flat month over month in July. Economists polled by Dow Jones expected an increase of 0.2%. 

Thursday's print follows a tame reading on consumer inflation, with the consumer price index coming in line with economist expectations. 

"US inflation data this week has been contained and very welcome for Treasuries," ING strategists wrote in a note Friday. "It absolutely eases higher rates pressure. But that pressure is far from gone. Real yields are higher and will likely remain so."

— CNBC's Hugh Leask also contributed to this report.