21
Morningstar FundInvestor
April 2
013
Bond-Market Snapshot
Interest-Rate Review
Higher-yielding sectors continued to inch ahead in March.
High-yield bonds were the biggest winners, gaining 1.0%, while
bank loans came in second, gaining 0.8%. High-yield munis
also returned 0.7%, but investment-grade munis slipped as new
issuance picked up slightly and refunding activity slowed.
Long-term munis dropped by 0.8% and intermediate-term munis
fell 0.2%. Other government-bond sectors were a mixed bag.
Intermediate-term Treasuries gained 0.4 as the yield on the 10-year
compressed slightly, but long-term Treasuries dropped by 0.1%.
Agency mortgage-backed securities also inched up by 0.1%. Invest-
ment-grade corporate bonds and asset-backed securities were
flat for the month.
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
(
03
-
31
-
13
)
p
One Year Ago
(
03
-
31
-
12
)
1 mo 3
6
1 yr
2
3
5
7
10
20 30
03-31-13
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
03-31-13
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 March 3
1,
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.
March 31, 2013
-0.79
High
1.73
Low
-1.83
Average
0.20
Last Month
(02-28-13)
-0.70
A Year Ago
(03-31-12)
-0.99
March 31, 2013
3.54
High
10.71
Low
2.01
Average
4.11
Last Month
(02-28-13)
3.67
A Year Ago
(03-31-12)
4.63
