Economy > National Debt

The Debt Party Nears its End

Are we already witnessing the early signs of the next debt hurricane?

Thomas Kolbe | May 23, 2026

In the wake of the closure of the Strait of Hormuz, interest rates on global bond markets are rising rapidly. Along with yields, fears of a debt crisis are reaching a fever pitch. However, the Iran crisis may soon fade and bring calm back to energy markets.

Are we already witnessing the early signs of the next debt hurricane? One thing can be said with certainty: the surge in oil and gas prices triggered by the blockade of the Strait of Hormuz has sent a massive shockwave through global bond markets, which otherwise tend to move rather sluggishly. This shock is still propagating along the yield curves.

It almost appears as if creditworthiness concerns regarding high levels of sovereign debt are overlapping with newly rekindled inflation fears. In Germany, the benchmark yield on ten-year government bonds has risen from 2.64 percent at the start of the Iran conflict to around 3.2 percent at its peak (as of May 19). In the United States, the most important capital market in the global economy, ten-year Treasury yields have reached 4.63 percent. Should this mark a new plateau, debt servicing costs will increase.

For Germany, the interest rate effect can be roughly calculated as follows: in the first year of a 1 percentage-point increase in interest rates, government interest expenses rise by around €2.5 billion. With approximately €250 billion in debt rolled over annually, total interest costs on the entire German debt stock would........

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