(Reuters) - The so-called bond market vigilantes who in the past drove up U.S. bond yields and forced the government into more conservative budget policies are holding fire this time around.

For now these influential - and at times feared -- investors seem to have concluded the U.S. economy is still too weak and deflation too much of a danger to tackle the budget deficit right away.

Prominent economist Ed Yardeni coined the term "bond vigilantes" in 1984 to describe why major investors were demanding higher yields to compensate for perceived risks of rising inflation as a result of large deficits.

But in recent interviews, some major bond fund managers say huge deficits are less of a worry in the short term than maintaining spending to keep the world's largest economy from falling back into recession.

(Reuters) - Beaten-up investors go into September, historically a weak month for stocks, facing key reports on jobs, manufacturing and services. If those disappoint, the S&P 500 could breach technical support levels, pushing stocks yet lower.

The S&P 500 index has fallen nearly 13 percent since April as investors fret about the chance of a double-dip recession. But the index has found solid support around the 1,040 level, with a sustained move below that proving tough.

Federal Reserve Chairman Ben Bernanke boosted stocks on Friday by signaling the Fed is ready to act if the economy worsens. But more weakness in upcoming indicators like non-farm payrolls and Institute for Supply Management surveys would intensify fears the economy is sliding back into recession.

"There is this continual trend toward numbers falling short of expectations," said Nick Kalivas, equity analyst at MF Global in Chicago. "My guess is you'll see some selling come in again next week on these numbers."

(Reuters) - Tax and budget policies need the same regularity and independence as monetary policy if countries around the world are to cope with looming stresses from pension programs, world central bankers were told at a Federal Reserve conference on Saturday.

"Modern monetary research and practical policy-making are united in aiming to make monetary policy scientific," said Indiana University Economics Professor Eric Leeper in a paper. "No analogous transformation has occurred with macro fiscal policy."

Leeper presented his paper at an annual conference held by the U.S. Federal Reserve in Jackson Hole, Wyoming.

His view will have resonance for policy-makers who in many countries have already cut interest rates to historically low levels and launched extensive asset purchase programs to stimulate growth. With prospects for new fiscal stimulus programs politically unpopular, central bankers are considering additional measures to ease financial conditions to support flagging recoveries in many countries represented at the conference.

Zhang Xin is betting hundreds of millions of dollars that the warnings of a housing crash are wrong. The former sweatshop worker has a track record of being right.

From her leafy, 11th-floor rooftop terrace at the headquarters of Soho China Ltd., billionaire Zhang Xin scans the relentlessly expanding Beijing skyline she helped create. Zhang's avant-garde buildings -- some sleek as chopsticks, others stepped like rice terraces -- became part of the hottest real estate market on Earth in 2010.

Zhang says she's well aware of the chorus of investors and economists who predict that China's property boom is about to go bust, taking the global economy down with it. The doomsday scenarios don't intimidate Zhang, a onetime penniless sweatshop worker who ascended to Wall Street by defying the odds. She hopes to prove skeptics wrong again this year by betting hundreds of millions of dollars on new buildings in Beijing and Shanghai, Bloomberg Markets magazine reports in its September issue.

"I don't see any bubbles," says Zhang, dressed in a white V-neck zippered top, black slacks and red heels. "The next few months will be a fantastic time to buy."