Gilt bubble explanation over-simplified

People often prefer simple and straightforward explanations for seemingly complex phenomena. The exp...

People often prefer simple and straightforward explanations for seemingly complex phenomena. The explanation regularly posted for the recent performance of the UK's government bond market is a good example. The simplistic explanation for the sharp rally in long-dated gilt and index linked prices was that widespread pension fund demand for these instruments had driven them to such dizzying heights. It is true that the UK's defined benefit (DB) industry is shifting asset allocation away from equities into fixed income assets. There are a number of reasons for this. Firstly, disenchantment am...