G7 debt costs rise as bond yields surge amid geopolitics and energy concerns

Rising global bond yields since the US–Iran conflict began have pushed up G7 governments' debt financing costs; FT analysis puts the total extra borrowing costs at about $16bn so far, with a forecast of up to $34bn more by end-Q1 2027 if yields stay higher. The US accounts for the largest share (roughly $10.6bn so far and about $21.7bn more if conditions persist), while other big issuers like the UK, Germany, France, Italy and Japan have absorbed the rest. Higher yields reflect inflation risks, energy-supply concerns from Hormuz disruptions, and expanding fiscal spending including defence, infrastructure, green investment, and AI. Even though the increases are small relative to overall budgets, they tighten public finances and could weigh on equity markets and credit if rates continue to rise.