Yes, the Bond Vigilantes are back, but they are only trying to make a reasonable return. 10-year Treasury interest rates have been rising since May when there was a Debt Ceiling crisis. Both Fitch and Moody’s have clearly stated that threats of the Debt Ceiling and Government Shutdown harm the U.S.'s credit ratings.
The threat of a U.S. federal government shutdown contributed to the interest rise this month. Today it looks like the shutdown will be avoided. But interest rates are sticky and so will stay high or even go higher. Once trust is lost, it is difficult to regain.
The Fed is no longer shielding the bond market from these events. As a bondholder, I am OK with higher interest rates, but am mostly staying in 6-month bills until long term rates stabilize. As a taxpayer, I am annoyed at the DC antics that cause higher costs with no benefits.
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US government shutdown bad for country’s credit, warns Moody’s, September 25, 2023
“A U.S. government shutdown would harm the country’s credit, rating agency Moody’s said on Monday, a stern warning coming one month after Fitch downgraded the U.S. by one notch on the back of a debt ceiling crisis.”
What Is a Bond Vigilante?
“A bond vigilante is a bond trader who threatens to sell, or actually sells, a large amount of bonds to protest or signal distaste with policies of the issuer.”
10-year Treasury yield is up 46 bp in the last month.
https://www.bloomberg.com/markets/rates-bonds/government-bonds/us
Control Panel: Countdown to debt ceiling crisis, May 14, 2023
“The markets are holding their breath while waiting to see what happens with the debt ceiling crisis that Treasury Secretary Janet Yellen warns may happen in June.”
Long-Bond Yield’s Biggest Jump Since ‘09 Has Ackman Eying 5%, September 28, 2023
30-Year Treasury yield is up about 82 basis points since June
Investors are in ‘fear stage,’ Brandywine’s McIntyre says
https://www.bloomberg.com/news/articles/2023-09-28/long-bond-yields-poised-for-biggest-quarterly-jump-since-2009#xj4y7vzkg