Yields on 30-year US Treasury bonds have climbed above the 5% threshold, a level not seen in recent years, intensifying concerns about the sustainability of the current economic cycle.
The move comes as the US dollar extends its rally to a 13-month high, driven by broadening global risk aversion and a rotation out of cyclical assets.
Some analysts have warned that the current trajectory could precipitate a severe global downturn, describing the potential outcome as the "mother of all crises.
Economists are increasingly vocal about the downside risks posed by this combination of a strong currency and elevated long-term rates.
Some analysts have warned that the current trajectory could precipitate a severe global downturn, describing the potential outcome as the "mother of all crises." The warning reflects anxiety that higher borrowing costs will eventually choke off growth, particularly in economies heavily reliant on dollar-denominated debt.
Despite the gloomy outlook from some quarters, equity markets have remained resilient.
The Dow Jones Industrial Average and the S&P 500 closed higher on Tuesday, suggesting that investors are not yet pricing in a deep recession.