21
Morningstar FundInvestor
December
2013
Bond-Market Snapshot
Interest-Rate Review
The U.S. corporate high-yield market and leveraged bank loans led
the way in November with a modest 0.5% gain each as corporate
spreads continued to tighten relative to U.S. Treasuries. Commer-
cial mortgage-backed securities and asset-backed securities were
also slightly positive for the month. Meanwhile, emerging-markets
bonds suffered the worst losses of November as the JPMorgan
Global Bond Index Emerging Markets dropped 3.6% for the month.
Continued uncertainty about the magnitude and timing of the
Fed’s tapering led to a modest backup in Treasury yields during the
month, most notably for longer-maturity issues. As a result, the
long and intermediate maturity Treasury indexes lost 0.3% and 2.5%,
while the U.S. TIPS Index dropped 1.1%.
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
(
11
-
30
-
13
)
p
One Year Ago
(
11
-
30
-
12
)
11-30-13
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
11-30-13
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 Nov. 3
0, 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.
Nov. 30, 2013
-0.98
High
1.73
Low
-1.83
Average
0.15
Last Month
(10-31-13)
-1.04
A Year Ago
(11-30-12)
-0.85
Nov. 30, 2013
3.02
High
10.71
Low
2.01
Average
4.08
Last Month
(10-31-13)
3.18
A Year Ago
(11-30-12)
4.25
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
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
