GLOBAL MARKET CALL: Bond Vigilantes Gone Wild

The Bond Vigilantes have gone wild worldwide, pushing government bond yields higher in developed and emerging markets alike.

A month ago, we asked whether rising yields reflected stronger growth, higher inflation, or looming fiscal crises. We still think the answer is mostly growth. The exception is where government finances are weakest. There, bond investors are charging a fiscal-risk premium. France may be on the verge of a full-blown debt crisis.