Bond Vigilantes
Bond investors who punish governments they see as reckless by selling their bonds and driving borrowing…
In plain English
Bond investors who punish governments they see as reckless by selling their bonds and driving borrowing costs up.
The phrase, coined by economist Ed Yardeni in the 1980s, paints bond buyers as a posse. If a government spends or borrows in a way they distrust, bond vigilantes dump its debt. Prices fall, yields jump, and borrowing suddenly gets expensive.
The UK's 2022 'mini-budget' turmoil, when gilt yields spiked and the pound slumped, is a recent example of markets disciplining a government.
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