Bond vigilantes return as inflation, deficits hammer long-end debt

Bond vigilantes are re-emerging as global interest rates rise due to inflation and fiscal deficits, according to Marathon Asset Management’s Bruce Richards. He noted significant repricing in bond markets, particularly Japan’s 10-year government bond, which has surged to 4%. Richards emphasized that while central banks can manage short-term rates, they struggle with long-term borrowing costs. He sees potential opportunities for fixed-income investors despite market volatility, contingent on energy cost stabilization.