 | The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. (January 2012) |
A bond vigilante is a bond market investor who protests against monetary or fiscal policies considered inflationary by selling bonds, thus increasing yields.[1]
In the bond market, prices move inversely to yields. When investors perceive that inflation risk or credit risk is rising they demand higher yields to compensate for the added risk.[2] As a result, bond prices fall and yields rise, which increases the net cost of borrowing. The term refers to the (alleged) ability of the bond market to serve as a restraint on the government's ability to over-spend and over-borrow.[3]
- ^ May 29, 2009. Bloomberg - Bond Vigilantes Confront Obama as Housing Falters Archived January 23, 2009, at the Wayback Machine
- ^ "Best of Richard Russell". Archived from the original on 2008-04-30. Retrieved 2009-01-30.
- ^ Caroline Baum (January 11, 2017). "Don't expect the bond vigilantes to do the Fed's work".