[US Treasury yields widen significantly this month, with the 30-year yield hitting a 19-year high; steepening yield curve and deepening inflation concerns] ⑴ US long-term Treasury yields are on track for a significant monthly increase, with the 30-year yield hitting a 19-year high of 5.275%, and the 10-year yield rising to 4.747%, its highest level since January 2025. The ongoing Iran war and the uncertain outlook for Federal Reserve policy are driving this, with each escalation of geopolitical tensions pushing up term premiums. ⑵ Trump announced a "major breakthrough" in the Gaza peace agreement, but both Hamas and Israel stated that obstacles remain. Meanwhile, reports of oil tankers being forced to turn back in the Strait of Hormuz prompted traders to reassess shipping risks, leading to a rebound of over 1% in both US crude oil and Brent crude. The rise in oil prices further amplified the upward pressure on long-term bond yields from inflation expectations. (3) The Federal Reserve kept interest rates unchanged this week by a 9-3 vote. Three dissenters advocated for an immediate rate hike to push inflation back to the 2% target, but Chairman Warsh, aside from reiterating his intention to curb inflation, did not provide further guidance on the policy path. The lack of internal consensus and the shift in communication style have exacerbated market uncertainty regarding subsequent decisions. The Richmond Fed president also stated that it was difficult to judge whether the current interest rate level was sufficient to curb inflation. (4) The spread between the two-year and 10-year yields widened to 45.6 basis points, the highest since May 27. The steepening of the yield curve reflects both expectations of economic expansion and a possible acceleration in inflation. The two-year yield rose for the fifth consecutive month, marking the longest consecutive rise since April 2022. The pricing of interest rate expectations at the short end is still undergoing repeated adjustments. (5) Federal funds futures indicate a 65% probability of a rate hike in September, down from nearly 82% a week ago but higher than Thursday's level. The break-even yield on 10-year Treasury Inflation-Protected Securities is about 2.28%. The market's pricing of average inflation over the next ten years is still higher than the Fed's target. The steepening of the yield curve and the stickiness of inflation expectations reinforce each other, and the risk of correction in long-term interest rates has not yet been fully released.

[Rainfall Causes Disasters in Multiple Areas of Sichuan; 89,696 People Evacuated in Advance] According to the Sichuan Provincial Geological Disaster Command Office, as of 7:00 AM on August 1st, the "July 29th" rainfall event has affected 88,203 people in 77 counties (cities, districts) across 13 cities (prefectures), including Chengdu, Zigong, Deyang, Mianyang, Guangyuan, Neijiang, Leshan, Meishan, Yibin, Ya'an, Ziyang, Aba, and Liangshan. 742.4 hectares of crops have been affected, 3 households (9 rooms) have collapsed, and direct economic losses exceed 40.97 million yuan. As of 7:00 AM on August 1st, 89,696 people in 95 counties (cities, districts) across 14 cities (prefectures) in Sichuan had been evacuated in advance within 24 hours (with the highest numbers in Yibin (33,522), Ya'an (17,208), and Liangshan (12,970)). To date, a total of 817,200 people have been evacuated in advance since the start of the flood season in Sichuan Province. (CCTV News)

[The Hormuz crisis forces alternative fuels, SAF price spread narrows from 5 times to 2 times, but airlines and refineries are stuck in a wait-and-see stalemate] ⑴ The continued closure of the Strait of Hormuz has not only disrupted crude oil and natural gas transportation but also cut off the distribution channels for refined petroleum products such as aviation fuel and cooking fuel. Although theoretically, soaring and volatile oil prices should be a strong catalyst for investment in alternative fuels, the uncertainty in reality has also suppressed the willingness to invest in capital expenditures. ⑵ Sustainable aviation fuel, as a typical example, was priced 3 to 5 times higher than conventional jet fuel before the crisis. As conventional fuel prices jumped, the price difference has narrowed to 1.5 to 2 times, but airline profits are being eroded by high oil prices. Signing long-term procurement agreements at this time faces significant price risks. Without regulatory enforcement, executives find it difficult to lock in premium costs in a highly volatile environment. ⑶ Refineries producing sustainable aviation fuel, while enjoying record profit margins, also tend to focus on operational optimization and the execution of existing plans rather than launching new project investments during periods of sharp price fluctuations. The industry's lack of visibility into long-term demand signals has constrained the pace of capacity expansion. (4) From the perspective of national energy security, the cost premium of alternative fuels should be seen as a dual benefit of security and sustainability. Governments are better suited than enterprises to bear this strategic cost. The EU has used this to strengthen its requirements for blending aviation fuels, while the US has retained its tax incentives but weakened them, resulting in an uneven policy response. (5) Fuel accounts for nearly 80% of final energy consumption, and electrification cannot cover all sectors. Current fluctuations are paving the way for the commercialization of low-carbon fuels, but further breakthroughs are needed in supply chain coordination, policy stability, and technological costs. Astute companies will be the first to deploy alternative fuel solutions while managing risks.