(PUB) Investing 2015

April 2015

Morningstar FundInvestor

21

Bond-Market Snapshot

Treasury Yield Curve ( % )

Yield to maturity of current bills, notes, and bonds

p Current ( 03-31-15 )

p One Year Ago ( 03-31-14 )

Interest-Rate Review Risky assets took a step back again in March as high-yield bonds took a hit, as did global bonds, and U.S. Treasuries rallied. Barclays US Treasury Long Index returned a strong 1.2% followed by Barclays US Treasury 5-7 Year and Barclays US Treasury 7-10 Year indexes both returning roughly 0.9% for the month of March. The worst performers for the month were global bonds, as the Barclays Global Aggregate Index lost almost 1%. High-yield bonds also struggled in March, as the Barclays US Corporate High Yield and Bank of America Merrill Lynch US High Yield Master II indexes lost 0.6% and 0.5%, respectively.

6.00

5.00

4.00

3.00

2.00

1.00

Maturity

1 mo 3

6

1 yr

2

3

5

7

10

20

30

Treasury and Municipal-Bond Yields

Municipal-Bond Spread Snapshot Unattractive 1.73

p Vanguard Interm-Term Tax-Exempt p Vanguard Interm-Term U.S. Treasury

7.00

-0.25

March 31, 2015

6.50

High

1.73

5.00

Low

-1.83

4.50

03-31-15

Average

0.11

3.00

Last Month (02-28-15)

-0.15

1.50

A Year Ago (03-31-14)

-0.47

0.00

Attractive -1.83

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

High-Yield and Treasury-Bond Yields

p Vanguard High-Yield Corporate p Vanguard Interm-Term U.S. Treasury

High-Yield Bond Spread Snapshot

15.00

3.60

Attractive 10.71

March 31, 2015

12.00

High

10.71

9.00

Low

2.01

Average

4.00

6.00

Last Month (02-28-15)

3.34

3.00

03-31-15

A Year Ago (03-31-14)

2.42

0.00

Unattractive 2.01

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Data as of March 31 , 2015 . Yield Spread: The difference between yields on differing debt instruments, calculated by deducting the yield of one instrument from another. The higher the yield spread, the greater the difference between the yields offered by each instrument. For municipal bonds, a smaller spread is attractive because munis typically pay smaller yields than Treasuries. For high-yield bonds, a wider spread is more attractive because junk bonds typically pay higher yields than Treasuries.