War-driven borrowing costs threaten global growth

The US–Iran conflict is boosting defense spending and energy prices, pushing bond yields higher and making borrowing more expensive for consumers and businesses. This energy-driven inflation and the seemingly endless demand for debt are forcing markets worldwide to reprice risk, elevating yields in Europe and Asia and raising Washington’s interest costs. If persistent, higher interest rates could slow the economy and stocks in a global doom loop, with the Fed facing pressure to tighten further and AI-fueled bond demand crowding out government borrowing.