What defines a bond vigilante? Where have they been? Why are they out riding now? Regardless of what you call the marginal sellers of bonds, they certainly are back. There are no marginal buyers that are independent of market reality. Central bankers were the marginal buyers, but they are gone. The Fed will be reversing their bond portfolio starting next month.
The bond vigilantes are traders willing to call out policymakers who are failing at their core mandate through moving capital out of harm's way. You can have your own opinions but not your own facts.
The Fed missed on their inflation forecasts and have neither recognized nor accepted that stronger action is required. The gap between the CPI and Fed funds tells us with clarity the problem. Rates should rise quickly even if supply shocks represent a strong portion of current inflation. If they don't, inflation will continue. There is either pain required today or more tomorrow.
The Fed knows this but is unwilling to focus on the problem. There are rumblings like the comments by Minneapolis Fed president Kashkari that the Fed may have to push long-term real rates into restrictive territory. The comments of former Fed vice-chairman Clarida who stated that rates will have to go above 3.5% if inflation is hovering higher than 3% is what the vigilantes are thinking.
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