majority in both houses of Congress, interest rates rose and the Treasury yield curve steepened as the market digested increased prospects of fiscal stimulus through spending and tax cuts and their potential impact on economic growth and inflation, two of the key drivers of interest rates. Milestone of US Bonds Market Gauging gradual progress Returns losing steam, not broken Search for yield isnt over Bank on higher short-term rates Municipal outlook Gauging gradual progress Fixed income plays a vital role in a well-diversified portfolio. Even in a low return, low-yield environment, high-quality bonds serve as an important diversifier, helping to manage risk from equities and other higher risk asset classes. Returns losing steam, not broken The onset of a U.S. recession or a major unexpected shock to the global economy could push rates lower and bond prices higher; however, prices on high- quality fixed income securities are more likely to be under pressure from several major sources in 2017. Search for yield isnt over High-yield bonds and bank loans could be two potential ways to help some suitable investors increase yield in their fixed income portfolios, in what is still a historically low-rate environment. Bank on higher short-term rates While longer-term Treasury rates are largely driven by expectations of future U.S. economic growth and inflation, short-term Treasury yields are more sensitive to Fed policy. With the prospects of additional Fed rate hikes in 2017, short-term rates are poised to continue to move upward. Municipal outlook Post-election, as fixed income markets digested the economic implications of a Trump presidency, yields in the tax-sensitive municipal market began to spike, though not as much as Treasury yields. Prices should stabilize relative to Treasuries once the new administration clarifies its tax policy. Milestone and Events for Bond Market in Indonesia The Indonesian government has estimated its infrastructure investment needs at a substantial $80 billion per year. A deeper and more vibrant domestic bond market could play a key role in financing future growth, help companies rely less on foreign currency bond issuance and reduce vulnerabilities to exchange rate fluctuations. Milestone of Bond Market in Indonesia the development of Indonesia's bond market has been dominated by government bonds, while the corporate sector has lagged, accounting for only 14% of the local currency bond market. Milestone of Bond Market in Indonesia Companies do turn to the bond market for financing, they tend to issue in foreign currencies. The ratio of companies' foreign currency bond issuance to rupiah bond issuance is 1.4 in Indonesia. On the supply side, the authorities should work to encourage greater use of the bond markets for financing by companies. Milestone of Bond Market in Indonesia
Another constraint on the greater use of bond
financing is the higher level of information and disclosure demanded by potential bond investors.