(PUB) Morningstar FundInvestor

December 2013

Morningstar FundInvestor

21

Bond-Market Snapshot

Treasury Yield Curve ( % )

Yield to maturity of current bills, notes, and bonds

p Current ( 11 - 30 - 13 )

p One Year Ago ( 11 - 30 - 12 )

Interest-Rate Review The U.S. corporate high-yield market and leveraged bank loans led the way in November with a modest 0.5% gain each as corporate spreads continued to tighten relative to U.S. Treasuries. Commer- cial mortgage-backed securities and asset-backed securities were also slightly positive for the month. Meanwhile, emerging-markets bonds suffered the worst losses of November as the JPMorgan Global Bond Index Emerging Markets dropped 3.6% for the month. Continued uncertainty about the magnitude and timing of the Fed’s tapering led to a modest backup in Treasury yields during the month, most notably for longer-maturity issues. As a result, the long and intermediate maturity Treasury indexes lost 0.3% and 2.5%, while the U.S. TIPS Index dropped 1.1%.

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

-0.98

Nov. 30, 2013

6.50

High

1.73

5.00

Low

-1.83

4.50

Average

0.15

3.00

Last Month (10-31-13)

-1.04

1.50

11-30-13

A Year Ago (11-30-12)

-0.85

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

3.02

Attractive 10.71

Nov. 30, 2013

12.00

High

10.71

9.00

Low

2.01

Average

4.08

6.00

Last Month (10-31-13)

3.18

3.00

11-30-13

A Year Ago (11-30-12)

4.25

0

Unattractive 2.01

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

Data as of Nov. 3 0, 2 013. 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.