(PUB) Investing 2015

February 2 015

Morningstar FundInvestor

21

Bond-Market Snapshot

Treasury Yield Curve ( % )

Yield to maturity of current bills, notes, and bonds

p Current ( 01-31-15 )

p One Year Ago ( 01-31-14 )

Interest-Rate Review U.S. Treasuries and Treasury-related securities including Treasury Inflation-Protected Securities performed the best in January. Barclays US Treasury Long Index returned 8.6%, and Barclays US Treasury 7–10 Year Index returned 4.1%. Barclays Global Inflation Linked US TIPS Index returned a strong 3.2% in January. Among the weak performers, global bonds continued to show weakness as seen in Barclays Global Aggregate Index’s 0.2% loss. Barclays US Corporate High Yield Index produced a small 0.7% return.

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

-0.17

Jan. 31, 2015

6.50

High

1.73

5.00

Low

-1.83

4.50

01-31-15

Average

0.12

3.00

Last Month (12-31-14)

-0.33

1.50

A Year Ago (01-31-14)

-0.96

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

2.62

Attractive 10.71

Jan. 31, 2015

12.00

High

10.71

9.00

Low

2.01

Average

4.00

6.00

Last Month (12-31-14)

3.52

3.00

01-31-15

A Year Ago (01-31-14)

2.66

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 Jan. 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.