(PUB) Investing 2016

21

October 2016

Morningstar FundInvestor

Bond-Market Snapshot

Treasury Yield Curve ( % )

Yield to maturity of current bills, notes, and bonds

p Current ( 09-30-16 )

p One Year Ago ( 09-30-15 )

Interest-Rate Review The bond market backed up slightly in September. The Barclays U.S. Aggregate Bond Index lost 0.06%, weighed down by a 1.61% tumble in long-dated Treasuries and a 0.25% dip in corporate credit. The mortgage-backed securities portion of the index gener- ated a slightly positive 0.28% return for the month and provided modest buoyancy in otherwise skeptical markets. Treasury Inflation- Protected Securities rallied 0.55% in part because the Fed held steady on interest rates. Meantime, the Barclays Municipal Index declined 0.50%—its first negative monthly return in over a year.

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

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

Municipal-Bond Spread Snapshot Unattractive 1.73

7.00

-0.24

Sept. 30, 2016

6.50

High

1.73

5.00

Low

-1.83

Average

0.08

4.50

3.00

09-30-16

Last Month (08-31-16) A Year Ago (09-30-15)

-0.17

-0.38

1.50

0.00

Attractive -1.83

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

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

Attractive 10.71

3.87

Sept. 30, 2016

12.00

High

10.71

Low

2.01

9.00

Average

4.02

6.00

Last Month (08-31-16) A Year Ago (09-30-15)

3.83

3.00

4.4

09-30-16

0.00

Unattractive 2.01

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Data as of Sept. 30 , 2016 . 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.