21
Morningstar FundInvestor
June 2
014
Bond-Market Snapshot
Interest-Rate Review
Interest rates declined in May for maturities five years and longer,
with the 7-10 year portion of the Treasury yield curve showing the
strongest returns. The Barclays US Treasury Long Index continued
its strong year-to-date performance with an additional 2.9% return
in May. Long-maturity municipal bonds also continued to do well
in May with the Barclays Municipal Long 22+ Year Index generating
2.2% returns, landing in the category as the second-best-performer
for the year to date after long-maturity taxable bonds. Short-duration
Treasury Inflation-Protected Securities continued to show weak
performance in May, as evident in the 0.7% returns for the Barclays
US Treasury TIPS 0-5 Year Index.
Treasury Yield Curve (
%
)
Maturity
6.00
5.00
4.00
3.00
2.00
1.00
Yield to maturity of current bills, notes, and bonds
p
Current
(
05-31-14
)
p
One Year Ago
(
05-31-13
)
05-31-14
7.00
6.50
5.00
4.50
3.00
1.50
0.00
15.00
12.00
9.00
6.00
3.00
0.00
Treasury and Municipal-Bond Yields
High-Yield and Treasury-Bond Yields
Municipal-Bond Spread Snapshot
Unattractive
1.73
Attractive
-1.83
05-31-14
High-Yield Bond Spread Snapshot
Attractive
10.71
Unattractive
2.01
p
Vanguard Interm-Term Tax-Exempt
p
Vanguard Interm-Term
U.S.
Treasury
p
Vanguard High-Yield Corporate
p
Vanguard Interm-Term
U.S.
Treasury
Data as of May 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.
May 31, 2014
-0.33
High
1.73
Low
-1.83
Average
0.12
Last Month
(04-30-14)
-0.34
A Year Ago
(05-31-13)
-0.86
May 31, 2014
2.44
High
10.71
Low
2.01
Average
4.04
Last Month
(04-30-14)
2.27
A Year Ago
(05-31-13)
3.39
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
1 mo 3
6
1 yr
2
3
5
7
10
20
30
