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Morningstar FundInvestor
February 2016
Bond-Market Snapshot
Interest-Rate Review
On the heels of the Fed’s announcement to tighten monetary policy,
the Treasury yield curve flattened over the course of the month.
The Barclays U.S. Aggregate Bond Index returned 1.38%. A rate hike
and extreme market volatility led to a big rally in long-maturity
Treasuries. Treasury Inflation-Protected Securities made a round-
about from the previous month, with the Barclays U.S. Treasury
TIPS Index delivering 55 basis points. High-yield bonds continued
to sell off because of worries about the impact of lower oil prices
on energy companies.
Treasury Yield Curve (
%
)
Yield to maturity of current bills, notes, and bonds
p
Current
(0
1-31-16
)
p
One Year Ago
(0
1-31-15
)
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 Jan. 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.
Jan. 31, 2016
-0.05
High
1.73
Low
-1.83
Average
0.09
Last Month
(12-31-15)
-0.04
A Year Ago
(01-31-15)
-0.19
Jan. 31, 2016
5.08
High
10.71
Low
2.01
Average
4.01
Last Month
(12-31-15)
4.68
A Year Ago
(01-31-15)
3.73
01-31-16
01-31-16
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
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