The Thai government forecasts the economy to grow at least 6 percent in 2008 from 5.5 percent in 2007 because domestic consumption and investment rebound after the

formation of new elected government in February.

Still, the Bank of Thailand is concerned that high oil prices will spur inflation to at least 5 percent in 2008 from 3.5 percent in 2007. That may prompt it to increase the benchmark interest rate to control the inflation rate.

To boost economic growth, the government plans to raise its spending by 50 percent this year. Higher expenditure will widen its budget deficit by 80 percent. It plans to sell bonds to finance the budget deficit.

With this information, what will be the outlook of government bond yields for the remaining of 2008? Please explain to support your expectation.