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Morningstar FundInvestor
October 2016
Bond-Market Snapshot
Interest-Rate Review
The bond market backed up slightly in September. The Barclays
U.S. Aggregate Bond Index lost 0.06%, weighed down by a 1.61%
tumble in long-dated Treasuries and a 0.25% dip in corporate
credit. The mortgage-backed securities portion of the index gener-
ated a slightly positive 0.28% return for the month and provided
modest buoyancy in otherwise skeptical markets. Treasury Inflation-
Protected Securities rallied 0.55% in part because the Fed held
steady on interest rates. Meantime, the Barclays Municipal Index
declined 0.50%—its first negative monthly return in over a year.
Treasury Yield Curve (
%
)
Yield to maturity of current bills, notes, and bonds
p
Current
(
09-30-16
)
p
One Year Ago
(
09-30-15
)
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 Sept. 30
, 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.
Sept. 30, 2016
-0.24
High
1.73
Low
-1.83
Average
0.08
Last Month
(08-31-16)
-0.17
A Year Ago
(09-30-15)
-0.38
Sept. 30, 2016
3.87
High
10.71
Low
2.01
Average
4.02
Last Month
(08-31-16)
3.83
A Year Ago
(09-30-15)
4.4
09-30-16
09-30-16
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 16
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16