The hidden dangers of sovereign debt
Advanced economy sovereign debt, once viewed as safe havens, is starting to look like a risk asset
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SOVEREIGN debt shocks rarely arrive with a clear trigger. Investor confidence can hold despite mounting vulnerabilities – until suddenly it does not.
In today’s markets, even assets once regarded as safe havens can become sources of instability.
Britain’s gilt market stresses in May, for instance, are a warning that advanced economies may be entering a more dangerous fiscal era.
