After years of bond market focus on monetary policy, our lead theme for the 2017 outlook highlights the central role of fiscal policy for investors. The Trump administration, combined with a Republican congress and a Paul Ryan-led House, suggests an historic opportunity to implement sweeping fiscal reform. Those include regulatory, infrastructure, and tax policy, along with a promised repeal of Obamacare and an eventual replacement. The debate is not about short-term fiscal stimulus leading to a temporary boost to growth. Rather, it’s about the possibility of changing the long-run outlook for potential growth. The dramatic increase in interest rates post election reflects repricing, not of the expected outcome, but a change in the distribution of future outcomes to incorporate higher growth scenarios.