Treasury Bills, Notes, and Bonds Discussion

[Done]

The system was ignoring my selection from the depth of book page.

I am new to purchasing T-bills so I thought it was just me. In Fido, the top yielding secondary 52-week was showing a minimum order of 200 (~$200k) and I wanted less so I figured I could go to the depth of book and find an ask with a smaller minimum order. I chose one and entered a bid. The confirmation page still showed the original 200 minimum but the smaller order did go through and was later filled. I’m not sure this is the way it always displays, but it was confusing to me.

 

[ITTN]

It would only be risky if there was a sharp rise in 1-2 year yields in the time frame from the time you purchased them to the time you wanted to sell. In that circumstance there is a chance you could be selling at a small loss. (I'm assuming that's what you mean by "risky")

Here's a personal example. I bought the 52 week T-Bill maturing on 9/7/23 at auction and paid 96.5016 per $100. Currently, the market price of that T-Bill is 96.2416 as 1-year rates have increased sharply over the past week. If I sold today I would realize a loss of $0.26 per $100. Even the 52 week T-Bills I bought in March are still showing a slight loss 6 months later. (For me this isn't a problem as I intend to hold to maturity).

Since you are thinking that the perfect house will come your way sooner rather than later you might want to keep up your current strategy and take the slightly lower rate. Liquidity of 52 week T-Bills isn't a problem. A slight loss of principal in the short run could be.

Thank you jldavid47, your answer, and example were most helpful. I'll be staying with my current strategy.

 

[jazz4cash]

I am new to purchasing T-bills so I thought it was just me. In Fido, the top yielding secondary 52-week was showing a minimum order of 200 (~$200k) and I wanted less so I figured I could go to the depth of book and find an ask with a smaller minimum order. I chose one and entered a bid. The confirmation page still showed the original 200 minimum but the smaller order did go through and was later filled. I’m not sure this is the way it always displays, but it was confusing to me.

I think I have experienced that also, but this time order did not go through and I got an error message (order less than minimum).

How did you enter the bid? I selected the “buy” button on the line next to the smaller minimum. If I get stuck again I’ll try entering the limit price manually and maybe even raise it a few tenths. I don’t think I’ll ever have orders >25k.

 

[Done]

How did you enter the bid? I selected the “buy” button on the line next to the smaller minimum.

Yes, I click the buy button on the depth of book screen, which prefills the corresponding limit price. If you lower the limit it may not work because that would require a higher minimum order. It’s also possible that those bonds are already sold when you complete the steps. In that case, return to the depth of book and try again.

 

[jazz4cash]

Yes, I click the buy button on the depth of book screen, which prefills the corresponding limit price. If you lower the limit it may not work because that would require a higher minimum order. It’s also possible that those bonds are already sold when you complete the steps. In that case, return to the depth of book and try again.

Got it. I was thinking to RAISE the limit price by a few hundredths. The markets are live I guess and the numbers on the screen are changing constantly.

 

[SecondAttempt]

I think given the inflation surprise on Tuesday (ok, maybe not a surprise to many here) there is a very real chance of a 1% interest rate rise at the next Fed meeting. I am personally getting very interested in T-bills at 4%! I am certainly paying a lot more attention to Treasuries than I have in over 15 years.

 

[audreyh1]

1 yr T-bill looks like it has decidedly crossed 4% this morning .

 

[copyright1997reloaded]

1 yr T-bill looks like it has decidedly crossed 4% this morning .

Just took the L (early close penalty) on a Connexus CD that had autorenewal on me late last year < 1% (I had forgotten about an old much higher rate CD maturing - which is not good). The good news (if any) is that there isn't much penalty because there wasn't much interest

That money will be redeployed into T-bills shortly.

 

[jazz4cash]

1 yr T-bill looks like it has decidedly crossed 4% this morning .

Curious. Yield curve peaks at 1 yr. Everything else is lower.

 

[aja8888]

Curious. Yield. Curve peaks at 1 yr. Everything else is lower.

No long term faith in the economy to invest in longer duration at these rates.

 

[FloridaWizard]

No long term faith in the economy to invest in longer duration at these rates.

Or the glass half full view: faith that future inflation will be lower

 

[jazz4cash]

Or the glass half full view: faith that future inflation will be lower

That’s more consistent with my view. The rates are not extreme by historical measures.

 

[copyright1997reloaded]

Or the glass half full view: faith that future inflation will be lower

Companies don't finance most capital improvement projects using short-term funding (unless they have no choice).

A "normal" (i.e. upward sloping) yield curve reflects risk - that is, longer durations require higher returns due to risk. An inverted yield curve indicates that there is more near term risk.

Imagine if a friend told you that he wanted you to lend money to his company. The terms are simple; 1.5 percent interest paid back in 2 years or 1.4 percent interest paid back in 10. It is clear that something is seriously wrong with your friend's business proposition. What if I told you that your friend is the U.S. treasury and his company is the entire U.S. economy, just as of a week ago.

https://www.unionbank.com/private-banking/perspectives/market-economic-outlook/inverted-yield-curve-explained

 

[ShokWaveRider]

How does buying treasuries from a Brokerage (Schwab) work (Not via Treasury Direct)? Can one still buy them the same way? Can one bypass the Auction. Sorry but I am new to this?

 

[copyright1997reloaded]

How does buying treasuries from a Brokerage (Schwab) work (Not via Treasury Direct)? Can one still buy them the same way? Can one bypass the Auction. Sorry but I am new to this?

Easy peezy.

You can do either (auction, secondary market)

Give me a minute, I will update this post w/Schwab specifics (that's where I've been buying most of them).

ETA: See the Schwab process pdf I just threw together. Hope this helps.

 

[ShokWaveRider]

Easy peezy.

You can do either (auction, secondary market)

Give me a minute, I will update this post w/Schwab specifics (that's where I've been buying most of them).

Thanks very much.

 

[copyright1997reloaded]

Thanks

I updated my post with some screen shots. Let me know if anything is confusing or you need more.

Ha ha, this is what my life is like with students.

ETA: Hope the above (life with students) didn't sound disrespectful, it wasn't meant to be. Also, I've been personally concentrating on auctions vs. buying in secondary. If you buy or sell in secondary, you will need to be cognizant of minimum amounts for certain asks/bids.

 

[nap470]

Question. Are most of you purchasing treasures on the secondary market? I have been looking for new 3 month to 1 year issues on Fidelity for weeks, and all I see are a few zero rate coupon bonds. The auction schedule says weekly, but I haven't seen new issue treasuries for a while. Am I looking at it wrong? The secondary market seems to want purchase sizes in the 100s or even thousands of bonds at a time. I'd prefer the 10 - 50 amount.

 

[11522914]

I updated my post with some screen shots. Let me know if anything is confusing or you need more.

Ha ha, this is what my life is like with students.

ETA: Hope the above (life with students) didn't sound disrespectful, it wasn't meant to be. Also, I've been personally concentrating on auctions vs. buying in secondary. If you buy or sell in secondary, you will need to be cognizant of minimum amounts for certain asks/bids.

Regarding minimum amounts on secondary treasuries. I would constantly refresh the screens when minimum amounts might be for 1000 or so and I only want to buy 50. Eventually but not always it would change in my favor.

What I wasn't aware of at Schwab is you click on market depth and there always is the opportunity with a minimum of 1. Usually it is the same price or a couple of basis points less. Never anything major.

 

[MBSC]

I have been looking for new 3 month to 1 year issues on Fidelity for weeks, and all I see are a few zero rate coupon bonds. The auction schedule says weekly, but I haven't seen new issue treasuries for a while. Am I looking at it wrong?

The 13-week and 26-week T-bills to be auctioned on Monday 9/19 are currently on Fidelity.

Select 'News & Research' > Fixed Income > New Issues tab.

Then click '+' next to Treasury. Ignore the expected yield.

The 13-week and 26-week are announced on Thursdays. They are available to place an auction order from roughly 2pm Thursdays to 9:30am Mondays barring holiday. All T-bills (52-weeks and less) are zero coupon and pay interest at maturity.

The secondary market seems to want purchase sizes in the 100s or even thousands of bonds at a time. I'd prefer the 10 - 50 amount.

Click on 'Depth of Book' on the right side of the Fidelity secondary market listings page for lower minimums.

 

[nap470]

The 13-week and 26-week T-bills to be auctioned on Monday 9/19 are currently on Fidelity.

Select 'News & Research' > Fixed Income > New Issues tab.

Then click '+' next to Treasury. Ignore the expected yield.

The 13-week and 26-week are announced on Thursdays. They are available to place an auction order from roughly 2pm Thursdays to 9:30am Mondays barring holiday. All T-bills (52-weeks and less) are zero coupon and pay interest at maturity.

Click on 'Depth of Book' on the right side of the Fidelity secondary market listings page for lower minimums.

Thank you. That's the process I follow and I now see just a 3 and 6 month zero coupon treasury bill, and two long term bills at 2032 & 2042. Is that all that is being offered? That's why I thought I am doing it wrong. Several weeks back there seemed to be many more offerings.

 

[nap470]

Sorry. I missed what you said about "all T-bills under 52 weeks are zero coupon." I think I got it now.

 

[audreyh1]

Question. Are most of you purchasing treasures on the secondary market? I have been looking for new 3 month to 1 year issues on Fidelity for weeks, and all I see are a few zero rate coupon bonds. The auction schedule says weekly, but I haven't seen new issue treasuries for a while. Am I looking at it wrong? The secondary market seems to want purchase sizes in the 100s or even thousands of bonds at a time. I'd prefer the 10 - 50 amount.

Fidelity offers various new treasury issues shortly after the auction is announced by the Treasury department. The auction schedule for notes is explained on this page. https://www.treasurydirect.gov/instit/auctfund/work/auctime/auctime.htm

I occasionally see the longer duration notes listed at Fidelity. These aren’t auctioned as frequently as the T-bills.

Time between announcement and the auction isn’t very long, so you have to know when to look.

At Fidelity you buy in increments of $1000 for the Treasury auction.

There is an auction for 13 week and 26 week T-bills every Monday, and Fidelity will let you place an order after the announcement on the prior Thursday. The 52-week T-bill auction occurs every 4 weeks on Tuesay. The link above goes into details.

 

[Midpack]

Time between announcement and the auction isn’t very long, so you have to know when to look.

I'm sure this has been shared here earlier, so you know when the next opportunity will come for any Treasury bill-note-bond? https://home.treasury.gov/system/files/221/Tentative-Auction-Schedule.pdf

 

[disneysteve]

Question. Are most of you purchasing treasures on the secondary market? I have been looking for new 3 month to 1 year issues on Fidelity for weeks, and all I see are a few zero rate coupon bonds. The auction schedule says weekly, but I haven't seen new issue treasuries for a while. Am I looking at it wrong? The secondary market seems to want purchase sizes in the 100s or even thousands of bonds at a time. I'd prefer the 10 - 50 amount.

I'm buying secondary with Vanguard. Most of my purchases have been for 5 bonds/$5,000, so the minimum hasn't been an issue. There's a drop down that starts at 1 and goes up from there. I just pick how many I want.