Video Transcript
Dave Sekera: Investment-grade corporate bonds performed strongly in 2014. The Morningstar Corporate Bond Index, which is our proxy for the investment-grade corporate bond market in general, rose 7.2% last year. Much of this outperformance was due to the decline in long-term interest rates (see graphic below). So, for example, the 10-year Treasury bond declined by 86 basis points and the 30-year Treasury bond declined by over 120 basis points. Currently, the 10-year is at about 3% and the 30-year is at about 3.6%. Offsetting some of the benefit of lower interest rates, corporate credit spreads did widen in 2014. For example, in the investment-grade sector, within our index, credit spreads widened about 20 basis points and ended the year at 140 basis points over Treasuries.
