From the Wikipedia:
Bond vigilantes is a term first coined by Edward Yardeni in 1984 to describe bond market investors who protest monetary or fiscal policies they consider inflationary by selling bonds, thus increasing yields .
In the bond market, prices move inversely to yields. When investors perceive that inflation risk is rising they demand higher yields to compensate for the added risk . As a result, bond prices fall and yields rise, which increases the net cost of borrowing. The term references the ability of the bond market to serve as a restraint on the government’s ability to over-spend and over-borrow.
From October of 1993 to November of 1994 10-year yields climbed from 5.2% to just over 8.0% over worries concerning the fiscal profligacy of the Clinton Administration. Upon this and the influence of Robert Rubin, Bill Clinton adopted a concerted effort to reduce the deficit. 10-year yields dropped to approximately 4% by November 1998.
Clinton political adviser James Carville said at the time that “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.”
As I read this in WSJ today:
Late Monday in New York, the 10-year note rose 18/32 point, or $5.625 for every $1,000 invested, at 95 5/32, to yield 3.713%, down from 3.783% late Friday, as yields move inversely to prices.