G7 finance ministers voiced growing concern over rising public debt and volatile bond markets as they met in Paris on Monday following a global sell-off driven by fears that the Iran conflict could fuel inflation.
Ministers are expected to discuss the economic fallout from the conflict and turbulence in global bond markets, a particular concern for Japan, while also seeking common ground on addressing economic tensions and global imbalances.
Bonds from Tokyo to New York extended losses on Monday, with investors betting on central bank rate rises amid concerns that higher energy prices could reignite inflation.
Asked whether bond markets were collapsing, French Finance Minister Roland Lescure said: “They’re undergoing a correction - I wouldn’t say they’re collapsing.”
“We are no longer in a period where public debt is not a subject,” he told reporters as he arrived at the meeting.
The meeting, which is also being attended by representatives from G7 central banks, will examine how countries can co-ordinate responses to shocks such as inflation through temporary, targeted and reversible measures, the French finance ministry said.
German central bank chief Joachim Nagel said policymakers could do a great deal to calm markets and restore positive momentum.
Japanese Finance Minister Satsuki Katayama said she had been instructed by Prime Minister Sanae Takaichi to “minimise various risks” when asked about rising long-term interest rates, without elaborating further.
The G7 finance ministers will also seek common ground on tackling global economic tensions and co-ordinating critical raw material supplies.
However, divisions within the G7 are complicating efforts to project unity ahead of a leaders’ summit in the spa town of Évian from 15 to 17 June.
“Don’t put in place measures that would make the situation worse,” International Monetary Fund chief Kristalina Georgieva said as she arrived for the meeting.
At the centre of the Paris agenda are what Lescure described before the meeting as deep-seated global economic imbalances fuelling trade friction and risking a turbulent unwinding in financial markets.
Focus turns to Trump-Xi summit
Lescure, who is hosting the talks, said the G7 offered an opportunity for frank dialogue among allies at a time of widening disagreements with Washington.
“These discussions are not easy. I’m not going to tell you that we agree on everything, including, of course, first and foremost with our American friends,” he told journalists.
The two-day meeting follows a summit between U.S. President Donald Trump and Chinese President Xi Jinping in Beijing that yielded few concrete economic breakthroughs, as tensions over Taiwan and trade simmered beneath a display of diplomatic cordiality.
Finance ministers will be looking for an update on U.S.-China relations following the Trump-Xi summit and the latest U.S. efforts to reopen the Strait of Hormuz.
U.S. Treasury Secretary Scott Bessent said the trip to China had been highly successful, adding that he would urge the G7 to enforce sanctions targeting Iran’s “war machine.”
Critical mineral high on agenda
Another priority will be critical minerals and rare earths, with G7 governments attempting to co-ordinate efforts to reduce dependence on China.
G7 countries are also seeking progress on a shared toolbox of measures to stabilise markets and encourage domestic investment, potentially including price floors for producers, pooled purchasing and tariffs.
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France has rejected claims that South Africa was dropped from the guest list for this year’s G7 summit under pressure from United States, insisting the decision to invite Kenya was its own.
Ukraine called for more support during the G7 summit in Canada. President Volodymyr Zelenskyy made a direct appeal at the two-day gathering, while Canada’s Prime Minister Mark Carney announced fresh sanctions on Russia and a major new aid package for Kyiv.
Australia is set to begin negotiations on a new security and defence partnership with the European Union, while also pushing for a long-anticipated trade agreement, Prime Minister Anthony Albanese announced at the G7 summit.
The Kremlin backed U.S. President Donald Trump's claim that Russia’s expulsion from the G8 in 2014 was a mistake but dismissed the relevance of the current G7, calling it “rather useless.”
Mexico and South Africa meet in Thursday’s World Cup opener in Mexico City, with both teams approaching the match from very different positions but facing their own pressures.
Azerbaijan's Foreign Ministry says 19 citizens have been repatriated following a deadly drone attack on two cargo ships in the Sea of Azov on 5 June.
The Pakistani city of Karachi is struggling under severe heat and humidity as the country enters a prolonged heatwave period. The Pakistan Meteorological Department (PMD) has warned of above-normal temperatures across much of the country between 7 and 12 June.
Ukraine's military said it struck a Russian "shadow fleet" tanker in the Black Sea as part of ongoing efforts to disrupt Moscow's energy and logistics networks. The move underscores Kyiv's focus on targeting maritime assets it says are used to bypass sanctions on Russian oil exports.
U.S. forces say they have completed strikes on Iranian military sites near the Strait of Hormuz. Iran responded with missile attacks on an American base in Jordan, marking a sharp escalation in tensions between the two sides.
U.S. President Donald Trump has threatened to seize Kharg Island and other major Iranian oil and gas facilities, escalating tensions between Washington and Tehran.
U.S. forces say they have completed strikes on Iranian military sites near the Strait of Hormuz. Iran responded with missile attacks on an American base in Jordan, marking a sharp escalation in tensions between the two sides.
Concurrent with the renewed military standoff between Iran and the U.S. in the Middle East, Tehran and Washington are clashing at the International Atomic Energy Agency (IAEA), where the U.N. nuclear watchdog’s Board of Governors is holding its quarterly meeting in Vienna.
The United Nations Educational, Scientific and Cultural Organization (UNESCO) has warned that escalating conflict in Iran and the wider region is placing multiple World Heritage sites at risk, with reports of damage to historic monuments caused by nearby airstrikes and shockwaves.
Iran's Revolutionary Guards said they had carried out attacks against a U.S. base in Jordan and 21 other targets in the Gulf on Wednesday in retaliation for American strikes around the Strait of Hormuz, Iranian media reported.
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