That's a new term to me(?)
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.”
http://en.wikipedia.org/wiki/Bond_vigilantes
This time the vigilantes are Chinese creditors.