Bond vigilantes lose their sway

[Balance of Power]( From [Bloomberg Politics]( [FOLLOW US [Facebook Share]]( [Twitter Share]( [SUBSCRIBE [Subscribe]](  Bill Clinton’s political adviser, James Carville, once said he’d like to be reincarnated as the bond market, since “you can intimidate everybody.” Those days of cowing even presidents [may be over](. The term ‘bond vigilante’ was coined in the 1980s for investors who punished governments by selling off sovereign debt and sending yields surging, forcing changes in policies or personnel. They had their heyday during the European debt crisis that kicked off in 2009, when investors had the power to make or break governments. From Greece to Italy and Ireland, leaders fell as yields soared and governments were forced into international bailouts. Now, with interest rates at rock bottom, bond yields are at [historic lows]( and investors’ ability to bully governments is waning. Italy remains [politically volatile](, but yields on its two-year debt went into negative territory this month. Spain doesn’t yet have a government after April elections, but it too can borrow at negative rates. Investors are snapping up bonds in troubled Turkey and Ukraine in search of some kind of returns. Some might see the end of the bond vigilante as healthy. But with politics increasingly divisive, the removal of a layer of market pressure on governments to stay within certain guardrails may mean even more wayward behavior. —[ Alan Crawford]( Global Headlines [Facing reality]( | Foreign minister Javad Zarif said Iran is preparing for the possibility of a second term for Donald Trump (rating it a better than 50% chance). Speaking yesterday with Bloomberg Editor-in-Chief [John Micklethwait](, Zarif warned the U.S. “shot itself in the foot” by abandoning a nuclear accord with Tehran that Trump frequently calls the “worst deal ever.” - [Click here]( for what he said on the Strait of Hormuz — a key choke-point for oil flows. - [And here]( to see the full television interview. [`Send her back’]( | In 2016, the familiar refrain at Trump rallies was “Lock her up,” a reference to his unsubstantiated claims that Hillary Clinton illegally used a personal email server. Now his supporters have another Democratic woman in their sights: Somali-born Representative Ilhan Omar. Some chanted “Send her back!” at a rally in the 2020 battleground state North Carolina, a day after the House rebuked Trump for his attacks on Omar and three other female Democrats. - [Read about]( another unsuccessful effort from a rogue House Democrat to impeach Trump. - [Here's the latest]( on the race for the White House.  Trump gestures to the crowd during last night’s rally. Photographer: Madeline Gray/Bloomberg [True believers]( | Australia’s first Pentecostal prime minister has taken a leaf out of U.S. Vice President Mike Pence’s campaign for “religious freedom” laws, telling a 21,000-strong crowd of Hillsong Church worshipers in Sydney “our freedoms as Christians in this country” should be protected. Scott Morrison’s message has sparked concerns among gay-rights groups it will lend weight to a push by religious organizations to enshrine in law their right to discriminate. [Train wreck]( | Oscillating between denial and diversion, former South African President Jacob Zuma has had a shocker of a performance while testifying to a commission investigating graft during his nine-year rule. His televised appearance this week has been a boon to his successor, Cyril Ramaphosa, as he fights Zuma supporters to cement control of the ruling party and revive investor confidence in Africa’s most industrialized nation. [Messy vote]( | Billionaire Kostyantin Zhevago is just one of the many oligarchs, sports stars, showbiz celebrities and civil activists seeking a seat in this weekend’s Ukraine parliamentary vote. As our Kiev bureau reports, the lineup of candidates could complicate President Volodymyr Zelenskiy’s bid to secure a footing in parliament for his own nascent party. What to Watch - The Trump administration [will deploy about 2,100 more troops]( to help “secure the southern land border” amid the rancorous debate over the treatment of undocumented migrants caught trying to enter the country. - The U.S. [suspended]( Turkey’s ability to buy the F-35 fighter jet and help build it after President Recep Tayyip Erdogan started receiving parts for the Russian-made S-400 missile defense system. - The second-deadliest outbreak of Ebola in history is now an international [public health emergency](, the World Health Organization said yesterday, warning it could spread outside the Democratic Republic of Congo. [And finally]( ... Trump’s new helicopter has a scorched Earth problem. The U.S. Navy and Lockheed Martin are working to fix a “high risk” issue with the forthcoming version of Marine One — which routinely ferries the president to and from Air Force One — after a test left burn marks on the White House lawn. Trump was not on board at the time. The first in a $5 billion fleet of new Marine One helicopters is supposed to be ready to go into service by September 2020. Trump already has showcased the new aircraft with a flyover during his July 4 celebration in Washington. Photographer: Alex Edelman/Bloomberg   You received this message because you are subscribed to the Bloomberg Politics newsletter Balance of Power. You can tell your friends to [sign up here](.  [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022