By Amanda Cooper, Karen Brettell, Laura Matthews and Gertrude Chavez-Dreyfuss

LONDON/NEW YORK, May 15 (Reuters) - Bond markets are bracing for interest-rate pain in a way they have not in decades, as investors assess the economic costs of the war with Iran and how the global economy will bear those burdens.

More from Yahoo Scout Are bond vigilantes returning to pressure government spending? What risks do rising bond yields pose for stocks? Why are Treasury yields reaching decade highs now? How is the Iran war affecting global bond yields?

Benchmark 10-year U.S. Treasury yields hit their highest in around a year on Friday, two ‌days after the government sold 30-year bonds at the highest yield since 2007, as traders anticipated the Federal Reserve would be forced to hike rates to rein in inflationary pressures stemming from energy ‌shocks.

Rising Treasury yields have a broad impact on other assets around the globe.

“With sticky inflation, higher rates are going to be here for longer," said Seth Hickle, portfolio manager at Mindset Wealth Management in Indianapolis, who said this would have ripple effects on home buying, corporate ​lending and purchasing power. Benchmark Treasury yields are the government security most influential to mortgage rates.

Investors said the broad selloff reflected a week of high inflation readings and the realization that the war in Iran was likely to continue to stoke higher energy prices, following a meeting between the U.S. and China that yielded no significant news on the Middle East situation. Brent crude rose 4% to exceed $109 a barrel.

Higher benchmark yields could also present headwinds for U.S. stock prices, as companies and consumers will face higher borrowing costs. This can also weigh on economic growth and corporate profits, while possibly making bond returns more competitive with stocks. Major global stock indexes were down between 1% and 2%, a day after ‌the S&P 500 and Nasdaq hit new highs.

Friday's market swings also reflected a ⁠sense among many investors that trading in U.S. stocks had grown disconnected from global economic fundamentals, due to excitement driven by the surging corporate profits tied to artificial intelligence investments.

U.S. indexes have surged back to record highs in the month-and-a-half since the markets' Iran war scare bottomed out at the end of March, a surge that raised eyebrows because ⁠it seemed at odds with sharply higher energy prices and related disruptions.

“There’s a realization that the market had gotten way ahead of itself," said Kenny Polcari, chief market strategist at Slatestone Wealth Management in Jupiter, Florida. "It wasn’t paying enough attention to what the bond market and economic data is telling it. It was caught up in this momentum AI trade.”