The yield on the US 10-year Treasury note hit 5.35% on Wednesday, its highest level since April 2002, as investors dumped bonds on war and inflation fears.

Yields eased slightly to around 5.28% on Thursday, but remained near multi-decade highs. Bond yields rise when prices fall, signalling investors want higher returns to hold US debt.

The surge reflects fears that a wider Middle East conflict could push oil prices higher and keep inflation elevated, forcing interest rates to stay high for longer.

Higher Treasury yields raise borrowing costs across the economy, from mortgages to corporate loans. Global markets are watching closely, as the 10-year yield is the benchmark for assets worldwide.

The last time yields were this high, the dot-com bust was still fresh and the Fed was cutting rates. Today’s surge is happening while policy stays tight, a very different backdrop for borrowers.

Mortgage rates in the US have already begun climbing again.