Investors are growing increasingly worried that the war involving the United States, Israel and Iran will drive government spending sharply higher and widen fiscal deficits — concerns that are pushing long-term bond yields higher worldwide, Bloomberg reports.

The 30-year U.S. Treasury yield has climbed close to 4.90%, the highest level in a month, as markets already worried about oil-driven inflation brace for heavier government borrowing to fund defense spending and offset rising energy costs.

Global bonds have also given up their gains for the year, with yields rising across the U.K., Germany, Australia and Japan.

“Long-end rates is a fiscal story and a government credibility story,” said Gang Hu, managing partner at Winshore Capital Partners. “It reflects expectations that Trump needs to spend money to fund the war and subsidize consumers for higher oil prices.”

The conflict, which began Feb. 28, has rattled global markets.

President Donald Trump suggested Wednesday the war could end soon but offered no timeline, adding “we’re not finished yet.”

Washington has not released an official cost estimate, though Congress is already discussing up to $50 billion in additional funding.

Analysts say rising long-term yields reflect both inflation fears from higher oil prices and concerns about worsening government finances.

“That’s partly what’s weighing on people’s minds — the financing of the war, the lower growth in general,” said Ruben Hovhannisyan, portfolio manager in TCW’s fixed income group.

The U.S. budget deficit reached about $1 trillion in the five months through February, even as investors factor in lost revenue after the Supreme Court struck down U.S. trade tariffs.

“It’s coming at a time when the tariffs are going the other way for Trump and that’s inflationary, and wars are inflationary,” said Matt Eagan, portfolio manager at Loomis, Sayles & Co., which manages more than $430 billion. “This is just adding to the deficit.”

Governments already spent heavily during the 2022 energy crisis after Russia’s invasion of Ukraine, and investors warn the bond market may now demand higher returns to fund new spending.

“With more limited fiscal headroom, higher debt loads and higher interest costs, the bond market may be less willing to fund such fiscal largesse this time round, or at least demand a higher real yield to provide that money,” said Chris Arcari, head of capital markets at Hymans Robertson.

In Europe, officials are weighing energy-support measures and increased defense spending.

“You can definitely imagine that scenario: joint EU issuance and therefore structural support across the EU area,” said Nomura economist Andrzej Szczepaniak.

Asia is seeing similar pressure.

“The rise in inflation expectations will also pressure bond yields higher and in Asia this includes Japan,” said Carol Kong, strategist at Commonwealth Bank of Australia.

If the war drags on, investors say they will demand higher returns for long-term debt.

“The supply of Treasuries is going to go higher at a time when the US needs to get buyers,” said Eagan. “I don’t see any interest in the 30 year until it’s north of 5%.”