Practical analysis for investment professionals
13 December 2012

Poll: Which Fixed-Income Markets Are in Bubble Territory?

Posted In: Fixed Income

In a poll conducted earlier this week in the CFA Institute Financial NewsBrief, we asked readers whether global fixed-income markets are in bubble territory, and if so, which ones are overvalued.

Poll: Of these global fixed-income markets, which is in bubble territory?
Poll Results: Of these global fixed-income markets, which is in bubble territory?

Less than 10% of respondents said that no fixed-income markets are in bubble territory. We can then extrapolate that a supermajority believe that at least one fixed-income market is overvalued. In a world where yields on sovereign debt are at all-time lows and where negative nominal yield debts are routinely being priced, it makes sense that 22% of respondents single out fixed-income markets as being the most in bubble territory.

Overheated sovereign markets have clearly driven a global quest for yield. Many high-yield debt markets are hitting all-time highs in issuance, and the demand for more high-yielding debt is hardly sated. This development has not escaped the watchful eyes of readers, with 18.5% indicating that they believe high-yield markets are in bubble territory.

Investors on the quest for yield along with safety are also plowing capital into investment-grade corporate securities, but only about 6.3% of respondents believe that these markets are overbought. About one in six respondents stated that more than one of the fixed-income markets is in bubble territory and a whopping one-fifth believe that all of the markets listed are price rich. In an uncertain macro-environment world where global central banks seem willing to underwrite anxieties, the end of fixed-income bubble markets seems far off.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

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About the Author(s)
Jason Voss, CFA

Jason Voss, CFA, is a content director at CFA Institute, where he tirelessly focuses on improving the ability of investors to better serve end clients. He is the author of the Foreword Reviews Business Book of the Year Finalist, The Intuitive Investor. Jason also ran a successful blog titled What My Intuition Tells Me Now. Previously, Voss was a portfolio manager at Davis Selected Advisers, L.P., where he co-managed the Davis Appreciation and Income Fund. He holds a BA in economics and an MBA in finance and accounting from the University of Colorado.

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1 thought on “Poll: Which Fixed-Income Markets Are in Bubble Territory?”

  1. Pingback: Ray Dalio on Bonds
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