21
Morningstar FundInvestor
September
2013
Bond-Market Snapshot
Interest-Rate Review
August was hard on bonds. With the exception of the shortest-
dated U.S. Treasuries, yields rose modestly across the curve
during the month, and intermediate-term and long-term Treasuries
continued to suffer losses. Emerging-markets was among the
hardest-hit sectors, with the JPMorgan Government Bond Index-
Emerging Markets Index dropping 4.2%. High-yield and long-
term munis also continued its summer weakness, with losses of
3.6% and 2.9%, respectively, while intermediate-term munis
fared relatively better with a 1.1% decline. Corporate bonds also
posted modest losses for the month, with investment-grade
names down 1.1% and high-yield declining 0.8%.
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
-
13
)
p
One Year Ago
(
08
-
31
-
12
)
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
Treasury and Municipal-Bond Yields
High-Yield and Treasury-Bond Yields
Municipal-Bond Spread Snapshot
Unattractive
1.73
Attractive
-1.83
08-31-13
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 Aug.
31, 2
013. 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, 2013
-1.14
High
1.73
Low
-1.83
Average
-
0.96
Last Month
(07-31-13)
-1.08
A Year Ago
(08-31-12)
-0.96
Aug. 31, 2013
3.53
High
10.71
Low
2.01
Average
4.10
Last Month
(07-31-13)
3.60
A Year Ago
(08-31-12)
4.25
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
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
