The term 'bond vigilantes' refers to debt investors seeking to impose fiscal discipline on governments they perceive as profligate by raising their borrowing costs.
Higher government borrowing costs can spill over into higher lending rates for consumers and companies, potentially putting economic stability at risk if they spiral out of control.
A surge in inflation since 2021, combined with rising government spending and central banks retreating from bond buying, means bond investors now carry more heft.
In the 1990s, U.S. President Bill Clinton's government prioritized balancing the budget after initial spending concerns sparked a jump in Treasury yields.
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