Bond bears are pushing benchmark Treasury yields toward the closely-watched 5% level ahead of US inflation data that stands to determine expectations for a Federal Reserve interest-rate hike next week. The yield on 10-year notes climbed 18 basis points this week to trade just below the psychologically-important level, which may attract dip buyers but also risks triggering further selling that could spill over into global markets.

At 4.96% on Friday, the yield has reached the most-elevated level since 2023 — and is approaching its highest since 2007. The surge in yields comes as traders wrestle with rising oil prices and inflation that’s run above the Federal Reserve’s target for half a decade. A reading of the US consumer price index Friday stands to be one of the most pivotal in years as traders price in a roughly 70% chance of a rate increase at the Sept. 16 Fed meeting.

Yields on the two-year, which are more sensitive to Fed rate moves, rose to as high as 4.59% this week. Thirty-year yields hit their highest since 2007, luring standout demand at an auction of the securities. The moves have spilled over into bond markets worldwide, with Australian benchmark yields hitting their highest since 2011 on Friday and Japanese equivalents trading close to the key psychological level of 3%.

“A lower US CPI and a Fed hike are really the only circuit breakers I see at this point, otherwise I don’t think anyone is comfortable being long rates,” said Michael Tang, a rates strategist at Commonwealth Bank of Australia in Sydney. “It’s just massive hawkish sentiment taking over.” For the $32 trillion Treasuries market, a move through 5% in 10-year notes would represent a growing challenge for Treasury Secretary Scott Bessent, who has struggled to stymie a selloff in bonds ahead of midterm elections.