(PUB) Morningstar FundInvestor

21

Morningstar FundInvestor

June 2 013

Bond-Market Snapshot

Treasury Yield Curve ( % )

Yield to maturity of current bills, notes, and bonds

p Current ( 05 - 31 - 13 )

p One Year Ago ( 05 - 31 - 12 )

Interest-Rate Review Employment gains, improvements in the housing market, and growing consumer confidence sent most bond sectors tumbling in May as investors braced for a possible slowdown in the Federal Reserve’s easing program. Long Treasuries fell by 6.2% as the yield on the 30-year bond rose by almost half a percent. Intermediate- term Treasuries also lost 3.2%. Agency mortgages dropped by close to 1.5%, as did long-term and intermediate-term municipal bonds. A strengthening U.S. dollar also led to losses for several global bond indexes; local-currency emerging-markets debt lost 7.1%, while hard-currency emerging-markets debt lost 3.8% and the Barclays Global Aggregate fell 3.0%. Most credit sectors were also stung; commercial mortgage-backed securities fell by 1.0% and high-yield corporate bonds lost 0.6%.

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

-0.86

May 31, 2013

6.50

High

1.73

5.00

Low

-1.83

4.50

Average

0.18

3.00

Last Month (04-30-13)

-0.91

1.50

05-31-13

A Year Ago (05-31-12)

-1.09

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

3.39

Attractive 10.71

May 31, 2013

12.00

High

10.71

9.00

Low

2.01

Average

4.11

6.00

Last Month (04-30-13)

3.52

3.00

A Year Ago (05-31-12)

5.02

0

05-31-13

Unattractive 2.01

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

Data as of May 31, 20 13. 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.