Yardeni Warns 'Bond Vigilantes' Are Back, But Yellen Disagrees

Veteran investment strategist Ed Yardeni believes "bond vigilantes" are selling Treasuries to protest inflation and rising deficits, pushing yields higher.

Treasury Secretary Janet Yellen disagrees, arguing today's environment is different than the 1990s when the term "bond vigilantes" emerged.

Yardeni thinks bond investors want compensation for rising inflation and deficit risks, which the Fed exacerbated by reducing its Treasury holdings.

Yellen believes the rise in yields reflects economic resilience and expectations that rates will remain higher, not bond vigilante activity.

The debate matters because if vigilantes push yields too high, it could slow growth like rate hikes, potentially spurring a recession.