Economist Craig Shapiro advised the Federal Reserve to stay out of the market response after the 30-year Treasury yield briefly rose above 5% following Moody’s downgrade of U.S. debt. Shapiro said the Federal Reserve should do "nothing at all" and let the so-called "bond vigilantes eat." Economist Ed Yardeni coined “bond vigilantes” in the 1980s to describe investors who sell bonds in response to policies they believe will cause inflation. Trump’s proposed tax cuts in the ‘Big, Beautiful Bill’ raise concerns about a larger fiscal deficit, making bond investors wary. Shapiro emphasized that bond vigilantes would address the deficit impact of tax cuts by selling off bonds in protest.
