The interest rate on a key U.S. government bond reached a nearly two-decade high on Tuesday, with the 10-year Treasury note climbing to 5.03 percent. This surge, the highest since 2007, could translate into higher mortgage and business loan rates. Investors are increasingly concerned about inflation and U.S. policy direction ahead of a Federal Reserve meeting concluding Wednesday.

Simultaneously, escalating geopolitical tensions in the Middle East are driving oil prices higher. Brent crude traded above $108 a barrel, up 2 percent, with prices rising nearly 50 percent since the start of the war. The conflict has disrupted vital oil routes, including the Strait of Hormuz and a key Saudi pipeline.

Over the past week, an average of about 20 ships passed through the strait, down from roughly 130 daily before the war. Advances by Iran-backed Houthis in Yemen have threatened Red Sea shipments, while Saudi authorities shut down a critical pipeline following a drone attack. With oil markets tight and bond yields climbing, financial markets face mounting pressure as the Fed weighs future rate decisions.