The yield on the 10-year Treasury hit the highest level since 2002 during Thursday's trading session as higher borrowing costs impact the economy of large and impact households.

Yields on longer-dated Treasurys have risen this year amid the geopolitical uncertainty caused by the Iran war and growing federal budget deficits, tighter monetary policy and more competition in the bond market from mounting levels of corporate debt issuance due to the AI buildout.

The 10-year Treasury yield rose as high as 5.34% during Thursday's trading session, the highest level since 2002, before declining later in the day and into Friday.

Brian Therien, senior analyst at Edward Jones, told FOX Business that higher Treasury yields "may be a headwind by increasing borrowing costs for households and business," potentially causing interest rate-sensitive areas of the economy like housing and auto sales to slow despite a solid labor market and resilient consumer spending.

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"The most immediate effect is typically through adjustable-rate debt, such as credit cards, home equity lines of credit and adjustable-rate mortgages. Rates on these loans are often tied more closely to short-term benchmark rates than to longer-term rates," Therien explained.

The 10-year Treasury note is a key benchmark for the U.S. economy. Interest rates on 30-year fixed mortgages tend to move in tandem with shifts in the 10-year yield.

It also influences auto loans and fixed-rate student loans through a similar process. Therien said "consumers considering new loans should be prepared for higher rates and payments."

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He added that there are some positives coming from higher interest rates when it comes to saving and investing.

"Savers and fixed-income investors earn more income. High-yield savings accounts, money market funds, CDs and bonds generally offer more attractive yields than they did earlier this year," Therien said.

"For long-term investors, higher starting yields can improve the return potential of bonds, with a larger share of the expected return coming from interest income rather than price appreciation."

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Peter C. Earle, senior director of research at the American Institute for Economic Research, told FOX Business "higher long-term yields raise businesses' financing costs as well as putting pressure on stock and existing bond prices. They also affect hiring retirement portfolios."

Earle added that "people buying Treasurys or reinvesting maturing holdings can secure higher yields, which may make it easier to generate income without taking on corporate credit risk.

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"But the improvement in purchasing power depends on inflation and taxes. A Treasury bond purchased today can still lose market value if yields rise further and its owner sells before maturity."

FOX Business' Sophia Compton contributed to this report.