Government bond yields are climbing toward 5%, which is bad news for borrowers, stock investors, and Taiwan's market, and it is pushing the Fed toward another rate hike.

• The US 10-year bond yield jumped to its highest level since 2023 and is closing in on 5%, with 30-year yields at their highest since 2007.
• Rising oil prices and a hotter-than-expected producer price report reignited inflation fears, and traders now put the odds of a Fed rate hike next week at about 70%.
• Higher yields make everything more expensive to borrow — US mortgage rates hit their highest in over a year, and companies face pricier bonds and tighter bank loans.
• Stocks are the other casualty: if safe government bonds pay close to 5%, money leaves richly valued tech and AI names, which is already dragging Taiwan's index below 47,000 and hitting TSMC.
• The selling has gone global, with Australian yields at 2011 highs and Japanese yields nearing 3%, while a strong dollar pressures the Taiwan dollar and other Asian currencies.

Outlook: With oil above $100 on the Iran conflict and inflation data still hot, yields look set to keep pushing higher and stocks to stay under pressure into next week's Fed meeting.