Dramatic times could lie ahead for bond markets

The little recognised threat of inflation could lead to a dramatic fall in the bond market, accordin...

The little recognised threat of inflation could lead to a dramatic fall in the bond market, according to Chris Burvill, manager of the Gartmore Cautious Managed fund. In light of this, Burvill says he would be keen to weight his portfolio more in favour of equities than his 60% equity barrier allows. "We could be at a climactic stage for the bond markets," he says. "The risk lies in rising yields, which are not factored into prices." Burvill believes that rising inflation could trigger higher interest rates and in turn a fall in bond values. "I also argue for interest rates rising to 6%...