"If the fiscal and monetary authorities won't regulate the economy, the bond vigilantes will," says economist Ed Yardeni on Bloomberg. 'Bond market vigilantes' is a term he coined in 1984 that can describe any bond-market participant (rather than an elite group of traders or fund managers).
Any bondholder may worry about whether the Federal Reserve has set interest rates too low and allowed the US government to borrow too cheaply to fund spiralling government spending. This may lead to inflation, a particular fear as it erodes a bond's value. If enough bondholders react by selling bonds then yields will tend to rise as prices fall. This makes debt issuance more expensive for heavily indebted governments.
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Paying the grandkids’ school fees could generate a shock IHT billPrivate school fees have soared as a result of the government’s VAT policy, meaning more grandparents are helping out – but what are the tax implications?
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Number of savings deals hits record high – as interest rates slump to two-year lowSavers have more choice than ever when it comes to choosing a savings account or cash ISA. But, the interest rates on offer continue to fall. What’s next for the savings market?
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Margin callGlossary When an investor borrows to bet on markets, they put down a deposit known as “margin”.
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Bernanke put
Glossary There is a widespread belief that the US central bank can always rescue the economy by decreasing interest rates. Since the current chairman is Ben Bernanke this is known as the 'Bernanke Put'
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Greenspan put
Glossary A 'put' is a type of option contract that increases in value as the price of the underlying asset falls.
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Plaza Accord
Glossary The Plaza Accord was an agreement signed between the US, Japan, West Germany, France and the UK at the Plaza Hotel in New York in 1985.