21
Morningstar FundInvestor
September 2
014
Bond-Market Snapshot
Interest-Rate Review
Long Treasuries continued to perform the best in August as well
as for the year to date as the Barclays US Treasury Long Index
returned 4.06% in August and 17.33% for the year to date. Long-
term munis also did well as the Barclays Municipal Long 22+
Year Index’s 12.37% year-to-date return was the second highest.
Short-term bonds in general did not fare so well in the month
of August as well as for the year to date. While short-term Treasury
Inflation-Protected Securities were the worst performing in
August with the Barclays US Treasury TIPS 0-5 Year Index losing
0.15%, short-term Treasuries performed the worst for the year
to date with the Barclays Treasury 1-5 Year Index returning a low
yet positive 0.88% for the year to date.
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
(
08-31-14
)
p
One Year Ago
(
08-31-13
)
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 Aug. 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.
Aug. 31, 2014
-0.12
High
1.73
Low
-1.83
Average
0.12
Last Month
(07-31-14)
-0.23
A Year Ago
(08-31-13)
-1.08
Aug. 31, 2014
2.86
High
10.71
Low
2.01
Average
4.02
Last Month
(07-31-14)
2.30
A Year Ago
(08-31-13)
3.60
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
08-31-14
08-31-14
