The Middle East war is driving up the cost of public debt in rich countries which could jam state budgets and push governments to unfold austerity policies, economists warn.

Global bond yields surge as Middle East war pushes Brent crude to $111. Treasury yields hit multi-month highs, raising stagflation fears across risk assets.

A bond rout is deepening as inflation fears take hold of the Treasury market, threatening to raise borrowing costs across the US economy.