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Morningstar FundInvestor
November 2016
Bond-Market Snapshot
Interest-Rate Review
Bond prices fell slightly in October, responding to uncertainty in the
presidential election and Federal Reserve interest-rate moves. The
Barclays U.S. Aggregate Bond Index had dipped 0.8%. The Barclays
U.S. Treasury Long Index provided more drama as it lost 4.1%, its
starkest drop in well over a year. The Barclays Municipal Index, which
has posted mostly positive performance over the trailing year,
tripped and fell 1.1%—its lowest monthly return since the taper tan-
trum of August 2013. The Barclays Corporate High Yield Index
provided a bright spot for the month, though, with a 0.4% gain, which
further contributed to the subsector’s 15.6% year-to-date return.
Treasury Yield Curve (
%
)
Yield to maturity of current bills, notes, and bonds
p
Current
(
10-31-16
)
p
One Year Ago
(
10-31-15
)
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 Oct. 31,
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.
Oct. 31, 2016
-0.30
High
1.73
Low
-1.83
Average
0.08
Last Month
(09-30-16)
-0.24
A Year Ago
(10-31-15)
-0.3
Oct. 31, 2016
3.79
High
10.71
Low
2.01
Average
4.02
Last Month
(09-30-16)
3.87
A Year Ago
(10-31-15)
4.41
10-31-16
10-31-16
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
3.00
2.50
2.00
1.50
1.00
0.5
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