The Iran war is going to pop our global sovereign debt bubble… Europe has fallen. Don’t panic; it gets much worse.

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Iran war energy shock lifts G7 yields to multi-decade highs while IMF warns of disorderly spike and debt near 100% of GDP

The Iran war that began in late February closed much of the Strait of Hormuz and cut Gulf LNG and oil flows. Brent has traded near or above $100–110 a barrel for months. European gas (TTF) sits near €88/MWh. Higher energy costs pushed inflation expectations up. From late February to early October, G7 average 10-year yields rose more than 110 basis points. US 10-year is around 5.14%, UK around 5.44%, France near 4.94%. German yields are lower but still at multi-year highs. IMF said public debt is at post-WWII peaks and on track to exceed 100% of GDP. It warned yields could spike in a disorderly way as energy inflation, higher rates, and AI-related borrowing compete for capital. Europe faces extra pressure: high energy import dependence, thinner gas storage, elevated debt in France and Italy, and political strains. Interest costs are rising as debt rolls over at new rates. No disorderly collapse has occurred yet. Yields remain elevated and the war continues.

https://www.imf.org/en/Blogs/Articles/2026/10/14/higher-bond-yields-underscore-urgency-of-fiscal-consolidation

https://www.reuters.com/world/china/imf-says-higher-bond-yields-underscore-urgency-fiscal-consolidation-2026-10-14/

https://niesr.ac.uk/reports/market-anatomy-why-have-gilt-yields-risen-so-much-year
https://www.cnbc.com/2026/10/13/treasury-yields-imf-debt-inflation-.html

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