SYDNEY--Asian bond traders braced Friday for the U.S. 10-year Treasury yield climbing above 5.0%, a potential tipping point for markets already spooked by rising energy prices, global inflation pressures and soaring U.S. government debt.

The U.S. 10-year yield hit new multi-year highs in the Asia session, ticking up to 4.979% from 4.9626% in New York. The benchmark yield is at highs not seen since October 2023 when it hit 5.0187%--the only time since 2007 that it crossed that threshold.

In the current climate, "the 10-year Treasury yield hitting 5% looks more like an inevitability than a forecast," said Padhraic Garvey at ING Financial Markets.

Higher real yields remain the biggest driver amid fiscal and wider issuance concerns, but oil prices and inflation expectations factor too, he added.

"Things could get more sinister if a break above 5% brings 6% into focus. That would be a far tougher for the wider market to stomach," he said. "We're not calling for it. But we're also not not calling for it," he said.

The updraft in bond yields extended to Australia, where 10-year yields hit the highest since May 2011.

U.S. yields' rise has continued to flow through to Australian bonds, exacerbated by strengthening expectations for interest-rate hikes by the Reserve Bank of Australia, said Shane Oliver, chief economist at AMP in Australia.

Japan saw similar moves Friday, with yields trading near multi-decade highs, while New Zealand bonds also sold off.

Jack Chambers, interest-rate strategist at ANZ, attributed the global bond slump primarily to a reassessment of the risks around inflation and how central banks will respond.

"This is the oil price story and what it means for near-term inflation outcomes. And central banks globally are clearly concerned about this," he said.

Resilient economic growth despite higher rates and energy prices also clears the way for tighter monetary policy.

That comes alongside concerns about the U.S.'s deteriorating fiscal position: "Japanese investors are able to get higher yields domestically now and the data suggests less demand from China for Treasurys," Chambers said.

Blake Gwinn, RBC's U.S. head of rates strategy, said Friday's moves also reflect fallout from the Republican Party convention in Texas.

"Today's story is actually a relatively simple one: Trump's comments and Iran headlines spiked oil, rates started to follow, global front-end positions started to get squeezed, pain ensued," he said, referring to the president's offer to pay Americans $5,000 apiece if Republicans win the midterms.

Depending on eligibility, that could cost the U.S. government around $1.2 trillion to $1.35 trillion, said Swissquote's Ipek Ozkardeskaya--"almost as much as the interest the U.S. must pay on its $40 trillion debt."

Even if debt markets experience brief relief, further deterioration seems likely, and that pain will be felt acutely in Asia, said Oliver at AMP.

"Bonds are starting to get oversold suggesting a short term rally, but the risk is skewed towards a further rise in yields longer term," he said.