by Wolf Richter, Wolf Street:

Bank of England: won’t “hesitate” to hike rates “as much as needed.” Bond market fears much higher inflation and interest rates, for much longer.

It was thought that central banks, with their QE and interest-rate repression, had killed off any remaining bond vigilantes that used to hound governments that trafficked in reckless fiscal policies and high inflation rates. Under these conditions, bond vigilantes – big institutional investors that were tired of getting beaten up by government policies – refused to buy bonds at low yields, thereby pushing up interest rates and imposing high costs of borrowing as punishment. But maybe these dreaded but long-buried bond vigilantes are now rising from their unmarked graves as central banks have turned away from propping up bond markets, have turned to QT, and have started raising policy rates.