Interest rates on government bonds worldwide are rising fast, which can have ripple effects on rates for mortgages, auto loans and business loans.

Tuesday’s sell-off in global bond markets pushed down prices and pushed up interest rates, or yields. It came as investors worried over renewed tension in the Middle East, inflation and swelling government deficits.

Interest rates on the 10-year Treasury note in the United States rose to nearly 4.8 percent. The 10-year Japanese bond rose past 3 percent for the first time since 1996. The German 10-year bund, a key indicator for the eurozone, rose to 3.33 percent for the first time since 2011.

In the U.S., there’s also uncertainty over the Federal Reserve’s policy outlook, with investors betting on a rate increase at the upcoming September meeting. America’s borrowing binge pushed the national deficit past $40 trillion in August, and A.I.-related debt issuance continues to push down bond prices.

Keeping an eye on the nearly $32 trillion market for U.S. government bonds, called the Treasury market, is important because it offers a clear signal of where the economy may be headed.

In the U.S., it’s the rate on the 10-year Treasury note that tends to set the temperature for consumer interest rates, including mortgages and auto loans. So they can affect everything from student loans to the housing market. The rate on the 30-year Treasury moves in sync with the 10-year note.

Here’s a guide to understanding what is happening with Treasury rates right now, and why it matters.

What is a bond?

First the basics.

A bond is a form of fixed-income debt, which means that when it is issued, someone is borrowing money and someone else is lending it. In the U.S. government bond market, the borrower is the federal government and the bonds are called Treasuries. Other governments do this, too: In Britain, they’re called gilts, and in Japan, they’re known as J.G.B.s, which stands for Japanese government bonds.

The United States issues debt with a range of “maturities” — a term that refers to when it has to be paid back. Treasury “bills” are short-term debt obligations, ranging from four weeks to a year. Treasury “notes” are medium term, maturing between two and 10 years. And Treasury “bonds” mature in 20 or 30 years.

The lender is the bond investor, who expects to be paid interest on the investment. That’s a key difference between a bond and other assets that people buy or trade, like stocks: The bond’s yield is the total annual return someone can expect to earn from it. (A bond’s yield rises as its price falls, and vice versa.)

Similar to the rate a homeowner pays on a mortgage, a bond yield reflects a variety of factors: when the debt will be repaid, the risk that it won’t be, the investor’s view on whether earnings on the loan will be more worthwhile than other investments, like stocks and cryptocurrencies.

When an investor owns a Treasury bond until it matures, the return the investor will receive is fixed, but because government bonds are publicly traded, their value can rise or fall just like a stock price, and that means yields move higher or lower, too. Higher yields mean investors are demanding a higher return to make the investment worth it to them.

Why are bond yields rising?

Often, it’s the 10-year Treasury note that gets a lot of attention. It has been climbing since late February, when the interest rate sat at 3.96 percent. Although the rise began reversing in April and then again in May, the yield began rocketing back up by the end of June. It’s currently 4.78 percent.

The rise has been less steep than previous runs, like when President Trump announced sweeping tariffs in April last year. But investors are aware of a cocktail of forces unlikely to rein in climbing rates.

Renewed fighting in the Middle East after a period of calm has sent a shudder through the bond market. The geopolitical uncertainty continues to rock oil markets, which in turn adds to worries over inflation numbers and affordability. Pair that with rampant spending by tech companies on A.I., which has left some analysts guessing that the hype has drawn investors away from bonds and others saying the enthusiasm has pumped up growth and inflation expectations.

The Treasury buyer “is now much more price sensitive, meaning investors are demanding a higher yield to absorb both government and corporate issuance,” Jason Goldberg, a Barclays analyst, wrote in a note.

Some analysts said a recent pullback in the equity market was a sign stock investors were growing more worried about bond yields, too.

Typically, bond prices and stocks move inversely. When stocks fall, investors move to a safer investment, like government bonds, to protect from losses. That negative correlation persisted for the first two decades of the 21st century, but has recently flipped. The correlation, now positive, is at its highest level since the 1990s, Bank of America analysts said in a research note last month.

That flipped correlation means bonds don’t hedge losses the same way they used to, because when stocks fall, so do bond prices.

“Investors are no longer willing to pay the same premium for an asset class that offers lower hedging utility,” the Bank of America analysts wrote.

How do rising interest rates predict what might happen next in the economy?

Because Treasuries are issued in varying maturities, each set offers predictions for what will happen in the economy at different time periods.

Typically, the longer the horizon for an investment, the more bond investors expect to be paid in interest. (We have more certainty about how things will go over the next three months than we do about the next decade.)

So the yield on a 10-year Treasury note is usually higher than the yield on one that matures in just a few months or a couple of years. When that relationship reverses during periods of increased economic anxiety, as it did in 2022, it is used as a recession indicator, because the risk in the near term eclipses the long-term risk.

“Yield volatility is likely to persist in the near term,” UBS’s chief investment office said in a note on Tuesday. The bank expects the 30-year and 10-year Treasury interest rates to end the year at 5 percent and 4.5 percent.