Janet Yellen is reminding the bond market that 2015 will include at least one interest-rate increase.

After Treasuries posted a four-day rally through July 8 on refuge demand linked to unsolved Greek bailout talks and plunging Chinese stocks, U.S. debt reversed direction. The Fed chair’s remarks then helped extend the biggest two-day rout since 2013, along with improved chances of a Greek solution and a rebound in China’s equities, which cooled concern of a meltdown for the world’s second largest economy.

Yellen said she sees receding headwinds for the U.S. economy, citing reduced influence from the strong dollar and lower oil prices. In selecting the time for the first rate increase since 2006, Yellen said policy makers will watch economic indicators, such as June retail sales, which are forecast to have increased for the fifth time in six months.

“Tightening is very much back in view, particularly if it’s affirmed by the data we get next week,” said Christopher Sullivan, who oversees $2.4 billion as chief investment officer at United Nations Federal Credit Union in New York. “That’s essentially what Chair Yellen wanted to communicate, and the Treasury market seems to be reflecting that.”

Rising Yields

Treasury 10-year note yields rose two basis points this week, or 0.02 percentage point, to 2.40 percent in New York, according to Bloomberg Bond Trader prices. The 30-year bond yield rose as much as 23 basis points during the last two days of the week, the most in two years.

The Bloomberg U.S. Treasury Bond Index 10+ Year, which measures government securities with maturities of 10 years or longer, has lost 4.3 percent this year. Hedge-fund managers and other large speculators increased net positions that profit from declines in 10-year note futures as of July 7, according to U.S. Commodity Futures Trading Commission data released Friday

“I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy,” Yellen said Friday in her first public remarks since the June meeting of the Federal Open Market Committee.

She will speak again July 15 and July 16 when she delivers semi-annual testimony to congressional committees. The Fed has kept its target for the federal funds rate at virtually zero since 2008 to bolster the economy.

Fed Outlook

The probability of a Fed rate increase at its December meeting moved up to 67 percent from 54 percent on July 8, according to futures data compiled by Bloomberg. For September, the odds increased to 33 percent from 21 percent.

Retail sales rose 0.3 percent in June, according to the median estimate in a Bloomberg survey of economists before the July 14 report. Sales gained 1.2 percent in May.

“We return to focusing more on the domestic economy and don’t as much about international developments affecting the Fed,” said John Briggs, a U.S. government-bond strategist at RBS Securities Inc. in Stamford, Connecticut, one of 22 primary dealers that trade with the Fed. “There’s room for the market to sell off and price in even more reasonable probabilities of September.”

The 10-year note yield will rise to 2.60 percent by the end of the year, according to the median estimate in a Bloomberg survey of analysts.