21
Morningstar FundInvestor
July 2
014
Bond-Market Snapshot
Interest-Rate Review
High yield performed the best in June as seen in the Barclays US
Corporate High Yield’s 0.84% return. However, on a year-to-date
basis, long-term bonds still show the strongest returns as 30 Year
US Treasury yields showed the biggest decline and the Barclays
US Treasury Long Index showed year-to-date returns of 12.1%. On
the other hand, intermediate maturities did not fare so well in
June as the 2–7 year portion of the Treasury yield curve showed the
biggest yield hike. Further, the Barclays US Treasury 5-7 Year
Index was the third-worst-performing index in June at a 0.2% loss.
That said, high-yield munis performed the worst in June as the
Barclays High Yield Muni Index showed the biggest loss at 1.8%.
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
(
06-30-14
)
p
One Year Ago
(
06-30-13
)
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
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 June 30
, 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.
June 30, 2014
-0.23
High
1.73
Low
-1.83
Average
0.12
Last Month
(05-31-14)
-0.33
A Year Ago
(06-30-13)
-0.96
June 30, 2014
2.30
High
10.71
Low
2.01
Average
4.03
Last Month
(05-31-14)
2.44
A Year Ago
(06-30-13)
3.84
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
06-30-14
06-30-14
