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Morningstar FundInvestor
June 2015
Bond-Market Snapshot
Interest-Rate Review
Bond yields rose across the Treasury curve in May 2015, putting
downward pressure on U.S. Treasury prices. Long-term bonds
took a big skid, falling 1.6%, as measured by the Barclays U.S.
Treasury Long Index. Despite the increase in nominal bond
yields, the U.S. inflation rate fell to negative 0.2% in May from
negative 0.1% in April. This caused U.S. Treasury Inflation-
Protected Securities to decline 0.8%, as measured by the Barclays
U.S. TIPS Index. Riskier credits fared better, with high-yield
corporate bonds up 0.3% for the month and high-yield municipals
gaining 1.1%.
Treasury Yield Curve (
%
)
Yield to maturity of current bills, notes, and bonds
p
Current
(
05-31-15
)
p
One Year Ago
(
05-31-14
)
Treasury and Municipal-Bond Yields
High-Yield and Treasury-Bond Yieldsv
Municipal-Bond Spread Snapshot
Unattractive
1.73
Attractive
-1.83
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 May 29
, 2015
. 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.
May 31, 2015
-0.40
High
1.73
Low
-1.83
Average
0.10
Last Month
(04-30-15)
-0.36
A Year Ago
(05-31-14)
-0.33
May 31, 2015
3.44
High
10.71
Low
2.01
Average
4.00
Last Month
(04-30-15)
3.46
A Year Ago
(05-31-14)
2.44
05-31-15
05-31-15
7.00
6.50
5.00
4.50
3.00
1.50
0.00
15.00
12.00
9.00
6.00
3.00
0.00
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Maturity
6.00
5.00
4.00
3.00
2.00
1.00
1 mo 3
6
1 yr
2
3
5
7
10
20
30