Government bonds witnessed a sell-off on Wednesday, even as US Treasury yields continued to surge beyond the crucial 2.5% levels and oil prices spiked to levels not seen in the past three years. The yield on the old 10-year benchmark bonds \u2014 6.79% yielding notes maturing in 2027 \u2014 closed at 7.44%, hitting the highest level since it was introduced in May last year.\u00a0 The yield on the new 10-year benchmark bonds \u2014 7.17% yielding notes maturing in 2028 \u2014 which were introduced last week, also closed at the highest level of 7.26% \u2014 rising 10 basis points from Tuesday\u2019s close.\u00a0 Market experts attribute the sell-off to the sudden surge in the 10-year US Treasury yield, which crossed the crucial 2.5% level on Tuesday. Since mid-December, the benchmark Treasury has been hovering over the 2.45% level but was finding stiff resistance below the 2.5% level. Experts consider the breakout as a sign of bad times for the bond market. Dealers even referred to the tweet by legendary bond investor Bill Gross from Janus Henderson on Tuesday: \u201cBond bear market confirmed today.\u201d.\u00a0 On Wednesday evening, the Treasury yield was hovering at 2.595% levels\u2014the highest since March 2017. Vijay Sharma, senior executive vice-president at PNB Gilts, pointed out that higher US yields and crude prices resulted in a weak opening in Indian bonds.\u00a0 \u201cAfter a weak opening, the markets further sold off due to the very low demand and the existing fragile sentiments in the Indian bond markets. Any adverse news, global or local, is having an amplified impact on bond yields due to lack of investor buying,\u201d he said. Brent crude was trading at a three-year high of $69.27\/barrel on Wednesday evening. Against the backdrop of rising crude prices, a crucial data to be watched is the consumer price inflation (CPI) for the month of December, which will be released on Friday. Although market participants indicate that the current sell-off has more to do with global factors, any rise in CPI inflation beyond the market expectations could push the yield even higher. The only positive sign so far is a lack of heavy selling from foreign portfolio investors (FPIs) in the Indian debt segment. According to latest depository data, FPIs were net buyers of Indian debt on Tuesday having bought $213.69 million on a net basis. Wednesday\u2019s data would be crucial in determining whether there is a reversal in their outlook.