Fran Kinniry principal at Vanguard's Investment Strategy Group on Bond Bubble

Morningstar interviewed Fran Kinniry about the bond "bubble".  Here are some of his comments:

...the bubble of the stock market typically, you think about a decline of 20%, and same thing even with the real estate bubble that we just saw--significant decline.

So, while we think bonds may be a little bit ahead of themselves and current yields look quite low, a bubble of that magnitude is probably unlikely.

I think most people are not used to having a negative return in bonds. And that certainly is a possibility if not a probability at some point in the future when interest rates rise. But if you're broadly diversified and have an intermediate duration, which is a core bond holding, then the order of magnitude of losses have, in the past, come inside of negative 10%, and so something around that should not be ruled out and something even worse. But to think of bubbles that have occurred in other asset classes, we would not expect to see that kind of magnitude of losses.