I find that several different things can cause the fondant to bulge – it’s happened to me several times! When you cover a cake with fondant, there’s always going to be some “settlement” of the cake – so make sure that you are not rolling your fondant too thick, or the weight will create a bulge. As has been mentioned by the other bakers, keepiing your cake cool is also important in preventing unwanted bulges. Also, make sure you don’t have any air bubbles.
I prefer to crumb coat my cake the day before and leave it in the refrigerator over night. If you don’t have time to do this, then refrigerate it at least 2 hours. When I’m ready to cover the cake, I allow it to rest for 10-15 minutes before proceeding. If I’m using a border, I will cut my fondant slightly above the cake board so that when the cake settles, it won’t bulge on the bottom. I know most bakers won’t do this, but this method has worked for me so far.
Good luck – I know how frustrating it is to finish a beautiful cake only to find a bulge the next morning!