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The Paris-based Organization for Economic Co-operation and Development is flagging a growing mismatch between market pricing and sovereign solvency.
The claim is straightforward: government debt interest bills are rising fast enough to pressure public finances.
The complication is that this is not a forecast of a specific recession, but a structural warning about the cost of servicing existing obligations as yields climb.
The case for concern rests on the mechanics of interest expense. When bond yields surge, the cost to refinance maturing debt increases immediately for governments with high debt-to-GDP ratios.
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