"The Resurgence of the Bond Vigilante: Insights from UBS Strategist"

Bond vigilantes, investors who protest against inflationary monetary or fiscal policy by selling bonds, are making a comeback as investors continue to sell amid the prospect of higher interest rates and a growing fiscal deficit. The yield on the benchmark 10-year U.S. Treasury note rose above 5% for the first time since 2007, prompting concerns about the impact on asset prices and the need for careful fiscal policy. The U.S. federal government ended its fiscal year with a deficit of almost $1.7 trillion, adding to a national debt of $33.6 trillion. UBS Asset Management's Kevin Zhao warns that the bond vigilantes' return will have implications for equity and house prices, fiscal policy, and monetary policy.