Bond vigilantes may be waking up as the US deficit balloons - and that's a threat to stocks and the economy, market vet says

• Bond market vigilantes could come into force as fears over the deficit rise, Ed Yardeni said.
• That refers to investors who seek to rein in government spending by sending Treasury yields soaring. 
• Yields on the 10-year Treasury this week notched their highest level since 2007.

Bond market vigilantes could be making a comeback in the US amid fears over the ballooning government deficit and too-stubborn inflation, according to market veteran Ed Yardeni.

The Yardeni Research president pointed to the slew of economic risks facing the US, with inflation still well-above the Fed's 2% target. Prices accelerated 3.7% in August, rising at a faster pace than the prior month.