The yield on the 10-year U.S. Treasury note climbed above 5% on Tuesday, marking the first time the benchmark rate has exceeded that level since October 2023.

By early afternoon in New York, the yield reached 5.009%, up from the previous close near 4.99%. It briefly touched higher levels around 5.03% to 5.045% during the session. The move reflects broader pressure on government bonds as investors price in higher borrowing costs across the curve.

Rising crude oil prices have intensified inflation worries. Oil climbed above $103 per barrel amid escalating tensions in the Middle East, including attacks linked to Iran-backed groups. Higher energy costs feed directly into consumer prices and have kept inflation readings above the Federal Reserve's 2% target.

Markets now assign a high probability to a 25-basis-point rate increase at the Federal Open Market Committee meeting concluding Wednesday. Such a move would represent the central bank's first hike since mid-2023. The prospect of tighter policy has added to the selloff in bonds.

Government debt levels continue to factor into the equation. The Treasury has issued substantial volumes of new debt to finance deficits, with recent auctions clearing at elevated yields. Corporate borrowing for technology investments, including artificial intelligence infrastructure, has also contributed to supply pressure in the bond market.

Equity markets reacted with modest declines. Stock futures for the S&P 500 and Nasdaq 100 fell in early trading as higher yields weighed on valuations. Mortgage rates and other consumer borrowing costs typically track the 10-year yield closely, raising costs for homebuyers and businesses.

Yields on longer maturities also rose, with the 30-year Treasury near 5.39%. Global bond markets saw similar moves, with yields climbing in Europe and Japan.

The last sustained period above 5% for the 10-year yield occurred in 2007. Today's breach underscores the shift from the low-rate environment that prevailed for much of the past decade.