Long‑term U.S. Treasury yields have crossed 5%, the highest since 2007, as investors demand more compensation for holding debt amid rising inflation.

The surge follows the Iran conflict that shut the Strait of Hormuz, inflating oil and gas prices and nudging global inflation higher. Central banks now face pressure to raise rates, tightening borrowing costs worldwide.

Higher yields elevate mortgage, auto and credit card rates, squeezing households and businesses. Governments with debt near 100% of GDP risk higher servicing costs, potentially triggering a debt‑pricing spiral.

Investors will likely favor safer, liquid assets, but the current environment erodes the “convenience yield” of Treasuries, forcing a reevaluation of risk‑return profiles across portfolios.