Japan's benchmark 10-year bond yield struck the key 3% barrier for the first time since 1996 on Tuesday, amid a deepening global debt selloff as traders fret about oil-driven inflation, monetary tightening and worsening fiscal conditions.

With ‌the Middle East crisis stoking price pressures globally, yields have been spiking from Tokyo and Sydney to New York and London as investors anticipate the need for central banks to raise interest rates.

The bond market is also under pressure from a deluge of issuance as hyperscalers aggressively raise money to fund the AI boom, in an environment where the U.S. debt load has passed $40 trillion and Japan's ministries are likely to request a record amount in an initial budget for next fiscal year. Yields rise when bond prices fall.