07:11 AM EDT, 05/07/2026 (MT Newswires) -- Even with Wednesday's bond market rally on the possibility that the United States and Iran are nearing a peace deal, advanced economy yields remain considerably higher than they were before the Iran war began, said National Bank of Canada.

The average G7 10- and 30-year borrowing cost ended April at 17-year highs and they remained within a few basis points of these levels on Wednesday, noted the bank.

Even if a permanent de-escalation were to come to fruition, the risk that the long-end remains high is very real, stated National Bank.

Certain members of the group, notably the U.S. and the United Kingdom, were already contending with overly high price pressures before a single missile was launched, it pointed out. Several members have been "overly generous" in their spending by subsidizing energy, or cutting taxes, despite the fragility of their public finances.

The lack of fiscal discipline combined with a high level of geopolitical risk will continue to put upward pressures on term premiums going forward, according to National Bank.