It has been a wild ride for interest rates and bonds over the past two years. Interest rates on the shortest term treasury bills have risen by over 400% since January 2004 from a low of .74% to 4.01% on December 5th, 2005. This has been due to the Federal Reserve raising short term interest rates 13 times since June of 2004.
Attached is an article I wrote that I couldn't post to this blog because of formatting issues. I encourage you to read it along with the Vanguard document (click on above link).
Scott Dauenhauer, CFP, MSFP