(the Morningstar calculator permits you to calculate the additional yield by reinvesting the interest ). Yield to Maturity may also assume reinvesting interest received at the coupon rate or a another and more appropriate rate as time passes. The above referenced calculator at Morningstar can perform the calculation using whatever interest rate is desired for the interest received but does not perform the amortization calculation. Many people use the term yield to maturity to exclude capital gains representing the difference between par and cost but I include it when making my decision, knowing that I will not receive that spread of course unless the company survives until the bond matures or redeems it earlier.
Yes, if the U.S. experiences the same kind of deflation that Japan had for many years after 1989, then the 10 year treasury would make sense even at the current yield of around 2.7%. But I am not about to touch it since I do not now believe that is the likely scenario for our future. So, unwilling to touch U.S. treasury debt (other than TIP) or any GSE paper , or any emerging market and junk debt, and wanting to add to my bond positions, the only pond left for me to fish is investment grade corporate debt. I have been discussing over the past several weeks some of the investment grade corporate debt that I have added to my portfolio recently, and that is where I will be concentrating my attention for the rest of December.