21
Morningstar FundInvestor
March 2016
Bond-Market Snapshot
Interest-Rate Review
The Treasury yield curve flattened over February, with the Barclays
US Treasury Long Index gaining 2.98% for the month and 8.15% for
the year to date. The Barclays US Aggregate posted a return of
0.71%, buoyed by modest monthly gains across all of its subsec-
tors. Municipal markets provided muted though positive returns,
and the Bank of America US HY Master II added 0.47% after three
previous months of losses. Particularly noteworthy, the Barclays
Global Aggregate benefited from loosening monetary policies across
regions and delivered 2.23% – its highest monthly return in the
past three years.
Treasury Yield Curve (
%
)
Yield to maturity of current bills, notes, and bonds
p
Current
(0
2-29-16
)
p
One Year Ago
(0
2-28-15
)
Treasury and Municipal-Bond Yields
High-Yield and Treasury-Bond Yields
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 Feb. 29
, 2016
. 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.
Feb. 29, 2016
-0.20
High
1.73
Low
-1.83
Average
0.09
Last Month
(01-31-16)
-0.05
A Year Ago
(02-28-15)
-0.15
Feb. 29, 2016
5.42
High
10.71
Low
2.01
Average
4.01
Last Month
(01-31-16)
5.08
A Year Ago
(02-28-15)
3.34
02-29-16
02-29-16
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
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
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15