MANILA - Bond yield curves in most emerging East Asian markets rose steeply between Dec 29, 2017 and Feb 15, 2018, reflecting the positive economic outlook - both in the region and globally - and increased prospects of higher inflation, according to a new report by the Asian Development Bank (ADB) released on Monday.

In the latest issue of the Asia Bond Monitor, the Manila-based ADB notes that 10-year government bond yields for nearly all emerging East Asian markets were up during the review period, with the exception of Vietnam.

Positive economic growth forecasts for 2018 for all the major advanced economies like the eurozone, Japan, and the United States have boosted the rise in bond yields in emerging East Asian markets, the report says.

"Emerging East Asian markets are on a firm footing, with most countries enjoying robust growth amidst relatively stable financial market conditions," said Yasuyuki Sawada, ADB chief economist.

Sawada said the region "is well placed to withstand external uncertainties, such as sharper than expected interest rate increases by the Federal Reserve as it gradually normalizes US monetary policy, but policymakers will have to be vigilant against external shocks through prudent macrofinancial policies."

The report says the local currency (LCY) bond markets in emerging East Asia continued to expand in the fourth quarter of 2017, reaching $12.3 trillion at the end of December 2017, although quarter-on-quarter growth moderated to 3.1 percent from 4 percent in the last quarter as bond issuance declined.

Foreign investment in emerging East Asia's bond market remains strong, with investors encouraged by the region's improving economic fundamentals, the report adds.

Despite the overall positive economic outlook for the region, the report also lists several risks including faster-than-expected interest rate hikes in the US, monetary policy normalization in major advanced economies, and the growing threat of inward-orientation across the global economy, which will likely dent the momentum of global trade expansion.