for faster route : deepening markets there are happy instances when waze suddenly beeps and an electronic voice announces that it has found a better route … are you familiar with this? as we have been moving along, there are conditions that indicate room for more growth in the domestic bond market! outstanding local currency ( lcy ) bonds represent just 34. 2 percent of the country ’ s gdp. the outstanding lcy bonds amounted to p5. 2 trillion ( usd102 billion ) as of end - june 2017. this resulted in an increase of 10. 2 percent year - on - year supported by gains in both the lcy government ( p4. 2 trillion ) and corporate bond ( p1. 0 trillion ) segments. during the same period, outstanding lcy bonds consisted of 81. 5 percent government bonds and 18. 5 percent corporate bonds. today the bond market is still largely composed of government - issued debt, but we see a promising performance in corporate bonds given their faster annual growth rate of 18. 4 percent as of end - june 2017. in the dollar bond market, early this year, the government issued a us $ 2 billion bond with a 25year tenor. the bond offering had a record - low yield of 3. 7 percent. corporate issuers with outstanding dollar bonds are looking to the lcy bond market to refinance foreign borrowings and to cushion the impact of exchange rate volatility. both reflect prudent liability management amid rising foreign interest rates. the local bourse is also upbeat. the pse composite index is reaching all time highs. date, the psei has gained something like 20 percent. 2 / 5 year - to - bis central bankers'speeches oh … but wait … like the waze and googlemap apps that report possible challenges ahead, we also see downside risks such as uncertainty from monetary policy in advanced economies and geopolitical risks. seeing these risks, we at the bangko sentral, have taken stock of our strengths, and remain vigilant. medium term philippine development plan on capital market development this optimum route towards economic development is consistent with the government ’ s medium term development plan. in this plan, the administration ’ s initiative to foster capital market development by promoting efficiency in trading, settlement and delivery of securities is outlined. this underscores the vital role of the capital market to complement bank lending for purposes of supporting long - term financing requirements of corporates and the government, particularly for its “

peso - dollar futures markets. 7 however, the share of peso - denominated government bond holdings by nonresidents remains high and has even increased recently to reach new records. also, mexico ’ s yield see blue chip economic indicators ( 2015 ), top analysts ’ forecasts of the u. s. economic outlook for the year ahead, january ; and banco de mexico ( 2014 ), quarterly report, july - september 2014, summary, november. for details on the mexican government ’ s oil hedge, see shcp ( 2014 ), “ el gobierno federal cubrio la totalidad de los ingresos petroleros para 2015. ” comunicado de prensa 097 / 2014. for an outlook of real and financial variables see, for example banco de mexico ( 2014 ), encuesta sobre las expectativas de los especialistas en economia del sector privado : diciembre 2014, december. bis central bankers ’ speeches curve has shifted downward and flattened in the last year. in other words, the peso has depreciated, but interest rates remain not too far from their all - time lows. the relative resilience of the domestic financial markets during recent months does not mean that the economy is immune to future shocks. uncertainty on the timing and pace of u. s. monetary normalization still looms, making it likely the ride in financial markets will be bumpy and posing challenges for the management of long - term fixed - income positions, among others. in this context, authorities must take a proactive stance, first by fortifying macroeconomic fundamentals in order to provide a shield against external forces. second, they must remain on alert, identifying possible systemic financial risks in time to make adjustments. one final point concerns monetary policy and inflation. as you know, from march 2013 to june 2014, the bank of mexico cut its policy interest rate target by 150 basis points in the context of weak economic activity. during 2014, inflation tended to remain above the upper limit of the variability interval around the permanent target of 3 percent. major factors for these pressures came from tax hikes implemented since the beginning of the year, and certain agricultural price increases. inflation will likely be lower during 2015 given favorable base tax effects, more moderate gasoline and electricity price adjustments, and the elimination of national long - distance phone charges. in fact, january first - half inflation was 3. 1 percent