Asian government bond yields scaled new highs on Tuesday, tracking U.S. Treasurys as higher energy prices fuel alarms about inflation.

The 10-year Treasury yield's breach of the closely watched 5% threshold overnight spilled over into Asian debt markets as investors demand more compensation to hold long-term bonds. It reached as high as 5.027% on Tuesday--its highest intraday level since 2007--and was last at 5.014%.

In Japan, the ten-year Japanese government bond yield hit its highest level in three decades on concerns that inflationary pressures would prompt the Bank of Japan to accelerate its rate increases. The BOJ is widely expected to raise its policy rate later this week.

The 10-year JGB yield gained 4.5 basis points to 3.030%, its highest level since September 1996.

"Inflation concerns remain front-of-mind ahead of the FOMC's [Federal Open Market Committee] decision this week, where markets have nearly fully priced in a hike," Westpac's Ryan Wells said in a note. The Fed funds futures market is currently pricing in a 95% probability of a rate increase.

A massive surge in U.S. government borrowing and debt issuance to fund the artificial-intelligence infrastructure buildout have also driven the U.S. Treasury selloff.

Yields on 10-year Australian sovereign securities climbed 8 basis points to 5.416% and 10-year New Zealand government debt increased 2.9 basis points to 5.047%. Bond yields move inversely to prices.

Oil prices remained elevated about $100 per barrel. Both the ongoing territorial gains by Iran‑backed Houthi rebels and the closure of a key pipeline in Saudi Arabia have materially altered the state of the oil market, Commonwealth Bank of Australia's Vivek Dhar said in a note.

CBA's low estimate of global markets holding just five to 11 weeks of oil and refined product stockpiles is growing more likely compared with a base case of 15-20 weeks, the strategist noted. If current U.S.‑Iran tensions persist or escalate, the markets could witness a global oil market in uncontrolled demand destruction, Dhar warned.

Front-month WTI crude oil futures were up 1.75% at $103.16 a barrel, and Brent crude oil was 1.5% higher at $107.31 a barrel, according to ICE data.

Asian equities were broadly lower, weighed by continued concerns over rising borrowing costs as well as a potential slowdown in the development of artificial intellignece.

South Korea's Kospi ended 0.9% lower, Hong Kong's Hang Seng Index declined 0.9% and Taiwan's Taiex was down 0.8%. Japan's Nikkei Stock Average closed flat.