understanding financial jargon
The phrase bond vigilante may conjure up images of professional bond traders who short sell the bonds of any government where they believe that government may be unable to honour their debts. However the phrase was coined back in the mid 1980's to describe any player in the bond market.
All bond investors whether large or small, professional or private, will worry about whether sovereign governments will be able to continue financing huge deficits, and whether large scale printing of money will prove inflationary. Both these factors can drive long-dated bond prices down, and so bond investors may very well demand higher yields (because of the increased risk of losing capital due to inflation) or even refuse to buy further government debt due to the increased risk of outright default.
From a governments point of view this makes them 'bad', hence the negative connotations of the term 'vigilante', but in fact bond investors are just doing what all investors do - looking for the best return for the least risk, while protecting capital.
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