Global bond yields hit new highs on Tuesday as renewed fighting in the Middle East lifted oil prices and traders braced for interest rate hikes, putting pressure on stock markets around the world. ^[1] Japan's benchmark 10-year government bond yield reached 3% on Tuesday for the first time since 1996, amid a global bond selloff. ^[2] Higher oil prices and renewed US-Iran fighting are stoking worries about inflation, which is negative for bonds. ^[3] Japan's 10-year benchmark yield hit 3% for the first time since 1996, pushing up government borrowing costs. ^[4] Masahiko Loo, senior fixed income strategist at State Street Investment Management, said the 3% yield is a normalization story, not a crisis, and that Japan gradually ceasing to be the marginal buyer of foreign bonds is helping push term premium higher globally. ^[5] Prashant Newnaha, senior rates strategist at TD Securities, said it is a genuine regime change, with JGBs no longer anchoring global fixed income, and that a further selloff could drive a repricing of global fixed income and make carry trades less attractive. ^[6] Vasu Menon, managing director of investment strategy at OCBC, said higher JGB yields could increase Japan's debt servicing costs and encourage Japanese investors to sell foreign assets and repatriate funds, putting downward pressure on overseas markets. ^[7]