The 10-year Treasury yield reaches its yearly peak following Brainard's indication of a rapid Fed tightening.

On Tuesday, the 10-year Treasury reached its highest level since May 2019 due to investors considering Federal Reserve Governor Lael Brainard's remarks about an aggressive strategy for reducing the central bank's balance sheet.

The 10-year Treasury note yield surpassed 2.562% before settling at 2.55%, exceeding the 2-year yield of 2.528%. This move caused the benchmark rate to rise above the 2-year yield, triggering an inversion of the yield curve.

The yield on the moved about 15 basis points higher to 2.7%, and the rose to 2.592%, adding almost 12 basis points. Yields move inversely to prices, and 1 basis point is equal to 0.01%.

Brainard, typically an advocate for easy policies and low rates, stated that the central bank must act swiftly to reduce inflation.

She stated that inflation is excessively high and is susceptible to upward fluctuations. The committee is prepared to implement more robust measures if inflation indicators and inflation projections suggest it is necessary.

Brainard's remarks coincide with the bond market's warning of a possible recession.

The Treasury yield curve inverted for the first time since 2006 at the start of last week, with 5-year and 30-year yields inverted. However, the 2-year and 10-year Treasury rates, which are the main part of the yield curve watched by investors, flipped on Thursday for the first time since 2019 but reversed course Tuesday.

Historically, yield curve inversions have been a sign of recessions, as investors express their doubts about the economy's near-term health by shifting from short-term to long-term bonds. The Federal Reserve's aggressive hike of interest rates and rising inflation may negatively impact economic growth.

The Fed's plan for tightening monetary policy was eagerly anticipated by investors, with the minutes from the previous meeting set to be released on Wednesday afternoon.

Chris Watling, CEO of Longview Economics, stated on CNBC's "Squawk Box Europe" on Tuesday that while the inversion of the yield curve is a sign of an economic downturn, it is only one of many indicators and the only one currently indicating recession risk. He emphasized that it can be extremely early, up to two years ahead.

On Tuesday, Volodymyr Zelenskyy, Ukraine's President, spoke to the United Nations Security Council and advocated for a Nuremberg-style tribunal to prosecute Russian war crimes.

This market report was contributed to by Sam Meredith and Amanda Macias of CNBC.