(PUB) Morningstar FundInvestor

April 2 014

Morningstar FundInvestor

21

Bond-Market Snapshot

Treasury Yield Curve ( % )

Yield to maturity of current bills, notes, and bonds

p Current ( 03-31-14 )

p One Year Ago ( 03-31-13 )

Interest-Rate Review March was a mixed bag. Local-currency and U.S.-dollar-denomi- nated emerging-markets debt led the pack with monthly gains of 2.9% and 1.3%, respectively. Meanwhile, most areas of the muni- cipal-bond sector continued to notch strong gains in March, making up lost ground after 2013’s losses. For instance, the Barclays High Yield Muni Index returned 0.5%, building on its strong year-to-date gain of 5.9% as of March 31. Credit-related fare also rose slightly, as bank loans gained an average 0.4% and U.S. high yield returned 0.2%. Intermediate-maturity U.S. Treasury securities realized the biggest losses for the month: The Barclays U.S. Treasury 5-7 Year Index dropped 0.8% and the Barclays U.S. Treasury 7-10 Year Index dropped 0.6% as rates rose across the belly of the curve, while short-term and long-term rates saw little movement.

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

-0.47

March 31, 2014

6.50

High

1.73

5.00

Low

-1.83

4.50

Average

0.13

3.00

03-31-14

Last Month (02-28-14)

-0.64

1.50

A Year Ago (03-31-13)

-0.79

0.00

Attractive -1.83

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

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

2.42

Attractive 10.71

March 31, 2014

12.00

High

10.71

9.00

Low

2.01

Average

4.05

6.00

Last Month (02-28-14)

2.70

3.00

A Year Ago (03-31-13)

3.54

0.00

03-31-14

Unattractive 2.01

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

Data as of March 31, 2014. 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.

Made with