21
Morningstar FundInvestor
March 2
013
Bond-Market Snapshot
Interest-Rate Review
U.S. government securities stopped their downward slide in Feb-
ruary as the Fed reaffirmed its commitment to easing. Long-
term Treasuries gained 1.3% and intermediate-term Treasuries
rose 1.1%, though Treasury Inflation-Protected Securities were
flat. Agency mortgage-backed securities also inched back into
positive territory, gaining 0.3%. Long-term and intermediate-term
munis rose by 0.3% and 0.4%, respectively. Credit sectors also
saw modest gains. Investment-grade corporate bonds rose 0.8%,
while high-yield corporates gained 0.5%. Hard-currency and
local-currency emerging-markets bonds dropped 0.1% and 0.2%,
respectively, as the U.S. dollar strengthened against several
emerging-markets currencies.
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
(
02
-
28
-
13
)
p
One Year Ago
(
02
-
28
-
12
)
1 mo 3
6
1 yr
2
3
5
7
10
20 30
02-28-13
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
02-28-13
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 Feb. 28
,
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.
Feb. 28, 2013
-0.70
High
1.73
Low
-1.83
Average
0.20
Last Month
(01-31-13)
-0.76
A Year Ago
(02-28-12)
-0.98
Feb. 28, 2013
3.67
High
10.71
Low
2.01
Average
4.12
Last Month
(01-31-13)
3.49
A Year Ago
(02-28-12)
4.48
