Bond Vigilantes Unleash Fury on Fed Over Inaction

Yardeni QuickTakes published an article on July 29, 2026, criticizing Fed Chair Kevin Warsh for failing his first credibility test. The Bond Vigilantes have been pushing bond yields higher, indicating that they want the Federal Reserve to take action against inflation.

The article mentions that in December 2024, the Fed cut the federal funds rate (FFR) by four percentage points, which was met with a 100bps increase in the 10-year Treasury bond yield. The same scenario played out in June when the FOMC pivoted to a hawkish stance.

The Bond Vigilantes are essentially saying that if the Fed won't take action against inflation, they will have to maintain law and order in the economy. In response, the article concludes that the Fed must raise short-term rates to lower long-term rates.