21
Morningstar FundInvestor
October
2013
Bond-Market Snapshot
Interest-Rate Review
With the exception of long-maturity U.S.Treasuries, those sectors
of the bond market that have been hit the hardest thus far in
2013 notched the biggest gains during the month of September.
Emerging-markets local-currency sovereign debt led the way,
with the JPMorgan Government Bond Index-Emerging Markets
Index rallying 5.1% during the month while the U.S-dollar emerg-
ing markets debt benchmark also notched a solid gain of 2.7%.
Municipal bonds also rebounded strongly after a rough summer
on the heels of Detroit’s bankruptcy filing, including a 3.3% and
3.2% gain for the high-yield and long-term muni indexes, respec-
tively. The belly of the U.S. Treasury curve posted solid gains,
with the intermediate maturity indexes gaining roughly 1.5% as
yields declined during 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
(
09
-
30
-
13
)
p
One Year Ago
(
09
-
30
-
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 Sept.
30, 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.
Sept. 30, 2013
-1.05
High
1.73
Low
-1.83
Average
0.16
Last Month
(08-31-13)
-1.14
A Year Ago
(09-30-12)
-1.02
Sept. 30, 2013
3.35
High
10.71
Low
2.01
Average
4.09
Last Month
(08-31-13)
3.53
A Year Ago
(09-30-12)
4.09
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
