Bond Vigilantes

In the 1980s and 1990s, a new term was coined:  Bond Vigilantes.  These are/were professional investors active in the bond market whose presence kept the Federal Reserve Board in line in terms of its interest rate policy, and the U. S. Government in line as far as its spending.  During that period, Bond Vigilantes had soe much more money to play with than the Federal Reserve Board that the Fed had trouble managing interest rates.

Right now, the Bond Vigilantes have their sights set on Europe, as this blog post by Ed Yardeni mentions:


http://blog.yardeni.com/2012/04/euro-mess-again_11.html

Apparently, the Bond Vigilantes only have so much capital to make the lives of central bankers and national governments difficult.

Eventually, these Bond Vigilantes will turn their sights again on the U. S. Treasury market.  But right now, the Federal Reserve Board has expanded its purchasing of bonds to the extent that the Bond Vigilantes feel it is more profitable to play in smaller ponds (Europe) rather than the deep capital pool that is the U.S. bond market.