(PUB) Investing 2016

21

November 2016

Morningstar FundInvestor

Bond-Market Snapshot

Treasury Yield Curve ( % )

Yield to maturity of current bills, notes, and bonds

p Current ( 10-31-16 )

p One Year Ago ( 10-31-15 )

Interest-Rate Review Bond prices fell slightly in October, responding to uncertainty in the presidential election and Federal Reserve interest-rate moves. The Barclays U.S. Aggregate Bond Index had dipped 0.8%. The Barclays U.S. Treasury Long Index provided more drama as it lost 4.1%, its starkest drop in well over a year. The Barclays Municipal Index, which has posted mostly positive performance over the trailing year, tripped and fell 1.1%—its lowest monthly return since the taper tan- trum of August 2013. The Barclays Corporate High Yield Index provided a bright spot for the month, though, with a 0.4% gain, which further contributed to the subsector’s 15.6% year-to-date return.

3.00

2.50

2.00

1.50

1.00

0.5

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

-0.30

Oct. 31, 2016

6.50

High

1.73

5.00

Low

-1.83

Average

0.08

4.50

3.00

10-31-16

Last Month (09-30-16) A Year Ago (10-31-15)

-0.24

-0.3

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

3.79

Oct. 31, 2016

12.00

High

10.71

Low

2.01

9.00

Average

4.02

6.00

Last Month (09-30-16) A Year Ago (10-31-15)

3.87

3.00

4.41

10-31-16

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 Oct. 31, 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.