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US and eurozone government debt sold off on Tuesday as traders weighed the prospect of stronger sanctions against Russia and comments from a top policymaker at the Federal Reserve that signalled that the central bank would move more aggressively to curb inflation.

The yield on the 10-year US Treasury note, which moves inversely to its price and is a benchmark for borrowing costs worldwide, climbed 0.16 percentage points to 2.56 per cent, its highest since May 2019. The yield on the policy-sensitive two-year note jumped 0.09 percentage points to 2.52 per cent.

The sell-off in the US was exacerbated by comments from Lael Brainard, Federal Reserve governor, who on Tuesday said she expected the central bank to begin a “rapid” reduction of its balance sheet to tighten policy.

Germany’s 10-year Bund added 0.09 percentage points to 0.61 per cent, and Italy’s equivalent bond yield rose 0.19 percentage points to 2.27 per cent. The UK’s 10-year gilt yield added 0.11 percentage points to 1.66 per cent.

Brussels said it was ready to launch a fifth package of sanctions on Russia that would include a ban on coal imports from the country. Restrictions on oil imports are being considered, although not expected to be included in this week’s package.

On Monday, the US and France had called for a significant escalation of punitive measures against Russia, following reports of atrocities by its forces in Ukraine. Joe Biden, US president, said he would “continue to add more sanctions” on Russia and proposed a trial to assess for possible war crimes.

Coal futures for April were up more than 12 per cent by late afternoon in London on Tuesday at $295 a tonne. Oil prices dipped, with Brent crude, the international benchmark, 0.1 per cent lower at $107.38 a barrel.

Altaf Kassam, Emea head of investment strategy and research at State Street Global Advisors, attributed the sell-off in government debt on Tuesday to a combination of the Fed’s increasing hawkishness, elevated inflation and the growing likelihood of a drawn-out war in Ukraine.

Marine Le Pen’s emergence as a serious contender against Emmanuel Macron in France’s presidential elections had also unsettled investors, he said. “There’s a feeling that the race there is much tighter now . . . French political risk is coming to the fore.”

“None of these factors are good for equity markets,” Kassam added, “but they’re worse for bonds.”

Supply-chain disruptions sparked by Russia’s invasion of Ukraine have added to concerns about persistently high levels of global inflation.

Data released on Tuesday showed that rising prices for energy and food pushed inflation to a 30-year high in February across the OECD group of rich countries. The annual rate of consumer prices across the 38 member countries advanced 7.7 per cent, up from 1.7 per cent a year before.

In equity markets, the US’s benchmark S&P 500 fell 0.7 per cent, while the technology-heavy Nasdaq Composite dropped 2 per cent, more than reversing gains in the previous session. Europe’s Stoxx 600 index closed 0.2 per cent higher, while Germany’s Dax slid 0.6 per cent.

Tancredi Cordero, founder of Kuros Associates, said the German economy “in particular will see its average input costs, when it comes to energy and commodities, rising considerably, which will dent operating margins of most domestic companies”.

“I don’t think there will be a recession [in Germany], it’s too strong an economy,” he added. “But in the short term, Germany will be reduced in terms of exposure by institutional investors.”

Elsewhere, Japan’s Nikkei 225 stock index closed 0.2 per cent higher. Markets in China and Hong Kong were closed on Tuesday for a public holiday.