The yield on 30-year US Treasury bonds reached 5% on Thursday, marking the first time the benchmark rate has hit this level since 2007, according to market data.

The milestone represents a dramatic shift in the bond market, as Treasury yields have climbed steadily from historic lows reached during the pandemic. The 30-year bond yield had fallen below 1% in 2020 as the Federal Reserve slashed interest rates to near zero to combat the economic effects of COVID-19.

The rise in long-term Treasury yields reflects multiple factors affecting the bond market, including the Federal Reserve's aggressive interest rate increases to combat inflation and investor expectations about future monetary policy. Higher yields make bonds more attractive to investors but also increase borrowing costs across the economy.

The 5% threshold on the 30-year Treasury is particularly significant as it serves as a benchmark for mortgage rates, corporate borrowing costs, and other long-term financing throughout the financial system. When Treasury yields rise, it typically leads to higher costs for mortgages, business loans, and government financing.

The last time 30-year Treasury yields reached 5% was in 2007, shortly before the financial crisis that led to the Great Recession. However, current economic conditions differ substantially from that period, with unemployment remaining relatively low and the economy continuing to grow despite concerns about inflation and monetary policy.