Liquidity in sovereign bond markets is falling and term premium is rising. With little sign of budgetary restraint almost anywhere, a fiscal crisis in a developed bond market is not inconceivable.
The unthinkable becomes thinkable in big regime shifts. Over the last several decades we have seen emerging-market crises, but other than Greece there have been no major developed-market fiscal flare-ups or defaults. Being able to borrow in the currency they can print has given DM countries a free pass.
