Henderson's Ward: US bond bubble could burst

The combination of high valuations for US bonds and large retail inflows suggests a bubble about to burst, says Henderson's Simon Ward.

The firm's chief economist highlights three causes for concern over the asset class. The real yield measure of ten-year treasuries fell down to just 0.5% in 2008 and in the summer of 2010, below the previous lows of the post-War period, he says. "It has moved back to 1% more recently but that is still a long way below the long-term average of 2.7%. "To get back to the median level historically, the nominal 10-year yield would have to rise to about 5%." He says another issue relates to retail inflows. "If you look at the 12 month running inflows into US bond and equity funds, then a...