The 10-year US Treasury yield rose to 5.01 per cent on Monday, its highest level since 2023, as surging oil prices from the Iran war drove global bond sell-offs. The yield later eased to 4.95 per cent but remains above the psychologically significant 5 per cent threshold, a level not sustained since before the 2008 financial crisis. Market analysts warn the rise signals growing economic stress, with higher yields increasing borrowing costs for mortgages, now near 6.8 per cent, and making capital more expensive for businesses.

The bond market volatility is fueled by inflation linked to Donald Trump’s war in Iran, rising public debt, and heavy bond issuance by tech firms financing AI expansion. Brent crude jumped to $109.80 a barrel after Saudi Arabia shut a key oil pipeline before retreating to $107.28. Stock markets declined, with the Nasdaq 100 down 0.6 per cent, as AI leaders called for a slowdown in development.

Strategists like Scott Chronert of Citi called the 5 per cent yield a “line in the sand,” warning of potential stock market disruption. RBC’s Mike Bell said the sell-off could worsen if oil prices keep rising. With a Federal Reserve rate hike expected on Wednesday—91 per cent likelihood of a quarter-point increase—investors debate whether tighter policy will curb inflation or risk triggering further yield spikes if delayed.