Rising bond yields add billions to G7 countries’ debt costs

US national debt crossed $40 trillion in 2026, and annual interest payments surpassed $1 trillion for the first time. The yield on 30-year US Treasury bonds reached 5.33% on August 18, 2026, the highest level since 2007. The UK is in a similarly uncomfortable position. Gilt yields approached 6%, a level not seen since 1998, and net debt interest for 2026/27 is estimated at £109 billion. France faces projected debt-servicing costs of around €59 billion in 2026, while Italy is on a trajectory where interest payments could consume roughly 9% of government revenue by 2028. Japan’s long-term yields are approaching 30-year highs as global borrowing cost pressures bleed across borders. Across the G7 as a whole, interest payments have exceeded defense spending in most member nations since 2024. Developed-market general government debt is projected to rise by $4.2 trillion to reach $75.8 trillion by the end of 2026, equivalent to roughly 104% of GDP. Most G7 nations are at or above the 100% debt-to-GDP threshold. Germany remains the notable exception, having maintained stricter constitutional limits on deficit spending. For investors, rising yields on sovereign debt create a genuine alterna...