Government bond yields rose sharply on Wednesday, fueled by stronger-than-expected manufacturing data that suggested the economy may be heating up faster than predicted, putting new pressure on the Federal Reserve to raise rates again. The yield on 10-year notes rose roughly 0.2 percentage points to around 5.1 percent, its biggest one-day jump since President Trump’s tariff proposal, and its highest outright yield since the buildup to the global financial crisis.

The rise in yields weighed on the equity market, with the S&P 500 falling roughly half a percent. The 10-year Treasury has risen more than a percentage point since the onset of the war with Iran, pushing up mortgage and other borrowing rates. The rise has been partly spurred by persistent inflation from rising oil prices amid the conflict in the Middle East, but largely driven by rising growth expectations tied to the expansion of artificial intelligence.

Last week, the Federal Reserve raised rates by a quarter of a percentage point, to a range of 3.75 percent to 4 percent, the first increase in more than three years. Following the manufacturing survey, investors raised expectations of another rate hike next month to a roughly 75 percent chance, up from 53 percent on Tuesday. The tepid auction results for five-year Treasuries point to the pros and cons of the recent rise in interest rates, with higher yields corresponding to higher interest payments for the government on its $32 trillion debt pile.