Bond vigilantes are bond market investors who sell government bonds to protest or punish fiscal or monetary policies they consider inflationary, irresponsible, or unsustainable. By selling bonds en masse, they drive up yields and increase borrowing costs for governments, effectively imposing market discipline on policymakers. The term was coined by economist Ed Yardeni in the 1980s. Bond vigilante activity can force governments to moderate spending or central banks to tighten monetary policy faster than planned.
Example
“Bond vigilantes drove 10-year Treasury yields above 5% as they sold off government debt in response to the ballooning fiscal deficit.”