Causer and Read: No bubble in bond markets

Fears of a bubble forming in bond markets are misplaced, say fixed income veterans Paul Causer and Paul Read, managers of Invesco Perpetual's £6bn Corporate Bond fund.

The managers agree hot money is flowing into bond markets, but say the present situation in fixed income is a “different animal” and cannot be compared to past bubbles in property, tech, or emerging markets. “I do not like the term bubble – I think it is inappropriate, and this is more than a semantic thing,” Causer says. “If you look at a bubble, it tends to be a phase of the market where investors buy something just because they think it is going up. It becomes very disconnected from the intrinsic value. In some bubbles there was no intrinsic value, such as tulips and ‘bluesky dotco...