21
Morningstar FundInvestor
February 2
013
Bond-Market Snapshot
Interest-Rate Review
Treasuries slipped in January on the back of positive jobs data.
Intermediate-term Treasuries dropped 1.5% as the yield on
the 10-year note rose above 2% for the first time since April 2012,
while long-term Treasuries fell by 3.5%. Other U.S. government-
related sectors posted mild losses; agency mortgage-backed secu-
rities fell by half a percent and Treasury Inflation-Protected
Securities lost 0.7%. Although investment-grade corporate bonds
dropped almost a percentage point, high-yield corporates
gained 1.4%. Municipal bonds posted gains across the yield curve;
long-term munis rose by 0.9%, while intermediate-term munis
gained 0.2%.
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
(
01
-
31
-
13
)
p
One Year Ago
(
01
-
31
-
12
)
1 mo 3
6
1 yr
2
3
5
7
10
20 30
01-31-12
7.00
6.50
5.00
4.50
3.00
1.50
0.00
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
15.00
12.00
9.00
6.00
3.00
0
Treasury and Municipal-Bond Yields
High-Yield and Treasury-Bond Yields
Municipal-Bond Spread Snapshot
Unattractive 1.73
Attractive -1.83
01-31-12
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 Jan. 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.
Jan. 31, 2013
-0.76
High
1.73
Low
-1.83
Average
0.21
Last Month
(12-31-12)
-0.86
A Year Ago
(01-31-12)
-1.12
Jan. 31, 2013
3.49
High
10.71
Low
2.01
Average
4.12
Last Month
(12-31-12)
3.81
A Year Ago
(01-31-12)
5.03
