(PUB) Investing 2015

Morningstar FundInvestor

May 2015

21

Bond-Market Snapshot

Treasury Yield Curve ( % )

Yield to maturity of current bills, notes, and bonds p Current ( 04-30-15 ) p One Year Ago ( 04-30-14 )

Interest-Rate Review Foreign bonds rallied in April. The J.P. Morgan GBI Emerging Markets Global Composite Index and the Barclays Global Aggregate Index posted returns of 3.1% and 1.1%, respectively, and the U.S. dollar weakened against a basket of foreign currencies. However, U.S. high-quality bond markets declined in April. The Barclays U.S. Aggregate Bond Index saw a 0.4% loss, and longer-term indexes were hit harder, with Barclays U.S. Treasury Long Index losing 3.1%. Not everything was gloomy domestically, however. Bank of America Merrill Lynch US High Yield Master II Index posted 1.2% gains, buoyed by stabilizing oil prices.

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

-0.36

April 30, 2015

6.50

High

1.73

5.00

Low

-1.83

4.50

Average

0.11

3.00

04-30-15

Last Month (03-31-15)

-0.25

1.50

A Year Ago (04-30-14)

-0.34

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 Yieldsv

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

High-Yield Bond Spread Snapshot Attractive 10.71

15.00

3.46

April 30, 2015

12.00

High

10.71

9.00

Low

2.01

Average

3.99

6.00

Last Month (03-31-15)

3.60

3.00

04-30-15

A Year Ago (04-30-14)

2.27

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 April 30 , 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.