Greece's borrowing costs have risen less than those of major European economies during a global bond market selloff, as strong primary budget surpluses and a sharply falling public debt load act as a shield for the country, according to Bloomberg data.
The yield on Greece's 10-year government bonds climbed 40 basis points over the past month to reach 4.24%. That increase was smaller than the jumps recorded in France, Italy and Britain over the same period, even as global bond yields have surged to their highest levels in almost two decades.
The turmoil is centred on the United States, where the yield on 10-year Treasury bonds touched 5% on Thursday and the 30-year yield jumped to 5.3%, its highest level since the 2007 financial crisis. Globally, bond yields also reached a 19-year high, according to a Bloomberg index.
Borrowing costs rise across Europe
In Germany, whose 10-year bond serves as the benchmark for eurozone markets, the yield rose 34 basis points over the past month to 3.5%, a 17-year high. The increases were even steeper in other large eurozone economies, with 10-year yields climbing 46 basis points to 4.44% in France and 43 basis points to 4.38% in Italy.
In Britain, the 10-year yield rose 41 basis points to 5.37%, the highest level among the Group of Seven nations.
Analysts linked Greece's comparatively smaller increase to the country's steadily declining public debt, which has been prompting upgrades from international credit rating agencies. Last Friday, the Canadian rating agency DBRS revised its outlook on Greece's BBB credit rating to positive from stable, saying it expected Greek debt to keep falling despite the global rise in bond yields.
Inflation and deficits driving global yields higher
The broader rise in borrowing costs stems from higher inflation and strained public finances in large economies, chiefly the United States but also France and Britain. In the US, large budget deficits have persisted for years since the coronavirus pandemic, running at around 6% of gross domestic product in 2026, five years after the pandemic began.
That has alarmed investors, as US public debt keeps growing, reaching $40 trillion last month, or 126% of GDP. The United States finances most of that debt through the bond market, which has swelled to $32 trillion.
US Treasury Secretary Scott Bessent said the debt level was not a cause for concern and would fall as the economy grows, a view markets have questioned. The rise in borrowing costs in recent years, a sharp reversal from the near-zero interest rates seen during the coronavirus period, has intensified the debt dynamics facing Washington. Interest payments on US debt exceeded $1 trillion in 2026 and are now the largest single item in the federal budget.
Britain and France also spend more on debt than defence
The same pattern is playing out in Britain and France, both of which now spend more on servicing their debt than on defence. Britain's budget deficit stood at 4.3% in 2025, with its debt reaching 94% of GDP.
In France, concern that lawmakers may fail to pass a budget for next year is keeping markets on edge, with elections due to be held next April and May. Investors have targeted France since the 2024 elections split its parliament three ways, leading to prolonged political instability. France's deficit remains close to 5% of GDP in 2026, while its debt is approaching 120% of GDP.
Middle East tensions add to inflation pressure
A stalemate in the war between the United States and Iran, along with renewed hostilities in the Persian Gulf, points to a longer-lasting energy shock, with markets now expecting central banks to raise interest rates further to bring inflation back to their 2% target.
The European Central Bank raised its key deposit rate by 25 basis points to 2.5% on Thursday, its second increase this year, saying the war in the Middle East would likely keep eurozone inflation above 2% through 2027. Its latest forecasts point to average inflation of 3% in 2026, easing to 2.5% in 2027 and 2.1% in 2028.
Markets are also pricing in a higher probability that the US Federal Reserve will raise rates, which have held steady at 3.5% to 3.75% since the start of 2026.
AI investment borrowing adds pressure
A separate factor pushing government bond yields higher is a large-scale shift by companies focused on artificial intelligence toward borrowing on capital markets to finance investments worth many hundreds of billions of dollars.
