21
Morningstar FundInvestor
May 2
013
Bond-Market Snapshot
Interest-Rate Review
Spurred on by the Bank of Japan’s announcement of a large quanti-
tative-easing program over the next two years, April saw gains for
virtually every fixed-income sector. Longer-dated securities
posted some of the biggest wins; long-term Treasuries returned
4.0% and long-term munis returned 1.6%, while intermediate-term
Treasuries and munis rose by close to 0.90%. Emerging-markets
debt rebounded after two months of weak performance; local- and
hard-currency emerging-markets bonds gained 3.7% and 2.8%,
respectively. Corporate bonds continued to rally; high-yield corpo-
rates gained 1.9%, inching ahead of investment-grade corpo-
rates, which rose 1.8%. The mortgage market also saw decent
gains. Agency mortgages returned 0.5%, while commercial
mortgage-backed securities gained almost 1.0%.
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
(
04
-
30
-
13
)
p
One Year Ago
(
04
-
30
-
12
)
1 mo 3
6
1 yr
2
3
5
7
10
20 30
04-30-13
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
04-30-13
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 April 3
0,
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.
April 30, 2013
0.19
High
1.73
Low
-1.83
Average
0.20
Last Month
(03-31-13)
-0.79
A Year Ago
(04-30-12)
-1.07
April 30, 2013
4.11
High
10.71
Low
2.01
Average
4.11
Last Month
(03-31-13)
3.54
A Year Ago
(04-30-12)
4.74
