Bond Market Outlook

At present, the size of the international bond market is about $45 trillion, with an optimistic bond market outlook. The market has produced more than expectation in the second quarter of 2007, and investors and experts are expecting that the market to go to further heights under favorable conditions.

The United States of America, Britain, and the Eurozone countries are at present leading the world capital market.

The bond market, or fixed income market, is used by investors to provide loans to big companies and the government. In return for this loan, the investor receives dividends and an established rate of interest on the loan principal.

The growth of this type of capital market is related to the existing interest rate pattern. A rise in interest rates will case a fall in the bond market. Consequentially, when the bond market is performing well, the interest rate pattern is also under control. Global stock markets are expanding rapidly, with a very high yielding capacity, while bond markets are growing more slowly. However, the risk factors related to the bond market is quite low and this is encouraging further investment in this market.

Another important factor shaping the bond market outlook of the investors is inflation. While some global inflation rates are becoming a matter of concern, most are still within tolerable parameters and thus the bond market is also expected to do well.

The bond market in US is the most developed market of the world. With a turnover of an estimated about $24 trillion, it amounts for half of the global bond market trade.

At the same time, countries like China and India are also enjoying good growth in their domestic bond markets. In particular, the Chinese short term bond market has raised $27 billion and the long term market raised about $13 billion from the market.