They punish governments that dare to deviate from financial orthodoxy. They strike fear into the hearts of finance ministers. They were seemingly a dying breed in the years between the crash of the late 2000s and the 2020 Covid-19 pandemic, but now the bond market vigilantes are heading back into town.
There was a time, not so long ago, when governments were able to borrow as much as they wanted at rock-bottom rates. For almost three years, investors paid for the privilege of lending the German government money because bond yields were below zero.
