Treasury Bills, Notes, and Bonds Discussion

[nap470]

I am purchasing 13 & 26 week bills each week but very tempted by the 52 week also. Last week's 2 year note was hard to pass up. We do not need the money in the near term so I probably should be searching for higher rate, longer term but just like the ease and flexibility of the shorter T-Bills right now.

 

[Midpack]

I am purchasing 13 & 26 week bills each week but very tempted by the 52 week also. Last week's 2 year note was hard to pass up. We do not need the money in the near term so I probably should be searching for higher rate, longer term but just like the ease and flexibility of the shorter T-Bills right now.

I think buying shorter for now is a good idea. Go longer when rates stabilize. 93% of my T-Bill holdings have been 26 week bills bought in the last 30 days. I will probably ladder with longer Treasuries when rates stabilize. FWIW

 

[aja8888]

Yep, buying some 13 weeks because they come due early January. but, I've been spending like a drunken sailor on T bills.

I just had a CD mature, so am trying not to spend it in one gulp.

Marie, I remember you said you wished you could have pick up some Apple stock when it was much lower earlier this year. If you keep watching it, you will have another opportunity soon.

 

[baseman250]

Bill vs Notes - YTM

Hi all,

Looking at what is available on the secondary market (on Vanguard), it looks like YTM of Notes is consistently a little higher than Bills of the same maturity.

Is there some reason for this?

Thanks,

 

[jazz4cash]

Hi all,

Looking at what is available on the secondary market (on Vanguard), it looks like YTM of Notes is consistently a little higher than Bills of the same maturity.

Is there some reason for this?

Thanks,

The notes will pay a coupon if there is over 6 months to maturity, so maybe that makes them more attractive to some buyers. Just a guess.

 

[JoeWras]

T-Bills auction results out for 13 and 26 weeks. Quoted are "Investment Rate"

13 wk: 3.415% (up 7bp from last week)
26 wk: 3.981% (flat from last week)

Interestingly, last week the 13 was flat and the 26 saw a good rise. This week the results are flipped.

Tomorrow's 52 wk should be interesting.

 

[copyright1997reloaded]

T-Bills auction results out for 13 and 26 weeks. Quoted are "Investment Rate"

13 wk: 3.415% (up 7bp from last week)
26 wk: 3.981% (flat from last week)

Interestingly, last week the 13 was flat and the 26 saw a good rise. This week the results are flipped.

Tomorrow's 52 wk should be interesting.

I randomly (i.e. w/o skill) picked this one correctly as I switched from buying the 26-week one to the 13-week one over the weekend. I would have said it was skill, but it was more trying to fill a hole in my short term ladder.

That 3.415% is surprisingly high.

ETA: My type-A have-to-track personality: I'm now sitting with a weighted 3.35% YTM and weighted 127 days to maturity.

 

[Golden sunsets]

I'm hoping it's ok to bring up Agencies on this string. I just noticed this offering on fido.

FEDERAL HOME LOAN BASER 5R-9025
4.67000% 09/30/2025

I'm familiar with Federal Home Loan Bank issues. I can't figure out what the phrase Baser as opposed to Bank means. Googling yielded zip. Does anyone have any insight? Also I'm assuming this is tax free at the State level. Does anyone have any info to the contrary?

We have a CD coming due Saturday that I want to reinvest in the 3 year range. This seemed better than CD rates, especially when factoring in the State tax free status. Thoughts?

 

[NomDeER]

I've got a question about taxes on Treasuries. If you buy a Treasury Note on the secondary market and part of your returns are based on interest and part on the discount, does it make any difference regarding whether they are subject to state income tax?

 

[MarieIG]

Marie, I remember you said you wished you could have pick up some Apple stock when it was much lower earlier this year. If you keep watching it, you will have another opportunity soon.

Ah, well, yes, but not today.

 

[aja8888]

Ah, well, yes, but not today.

Haha!

 

[aja8888]

I'm hoping it's ok to bring up Agencies on this string. I just noticed this offering on fido.

FEDERAL HOME LOAN BASER 5R-9025
4.67000% 09/30/2025

I'm familiar with Federal Home Loan Bank issues. I can't figure out what the phrase Baser as opposed to Bank means. Googling yielded zip. Does anyone have any insight? Also I'm assuming this is tax free at the State level. Does anyone have any info to the contrary?

We have a CD coming due Saturday that I want to reinvest in the 3 year range. This seemed better than CD rates, especially when factoring in the State tax free status. Thoughts?

Could be an abbreviation of BA (bank) SER (serial number).

 

[Golden sunsets]

Could be an abbreviation of BA (bank) SER (serial number).

That makes sense. Unfortunately, I realized after I posted the question that the issue is not call protected. I don't think the extra yield is worth the risk of call. This would be part of our 5 year CD ladder, although I don't actually care if the ladder is made up of CD's or Treasuries. The ladder shortened over the last several years as I added the maturing CD's in 2 different years to a GTE add on that now comes due next summer. At that point I'll have maturing funds that need to be reinvested in 3 different years to re-establish the 5 year ladder. I keep a close eye on rates to calculate whether I should break that CD early.

 

[MarieIG]

Haha!

Shhhhh, it's a secret but I have a limit order in for $120. (Needless to say, it hasn't executed. )

 

[Graybeard]

T-Bills auction results out for 13 and 26 weeks. Quoted are "Investment Rate"

13 wk: 3.415% (up 7bp from last week)
26 wk: 3.981% (flat from last week)

Interestingly, last week the 13 was flat and the 26 saw a good rise. This week the results are flipped.

Tomorrow's 52 wk should be interesting.

Is the Investment Rate what we get when we bought the 13 week today? I ask cuz there are 4 different rates on that PDF.

Is there a link for TD that shows this info that is on a table vs a PDF?

 

[Graybeard]

When I have bought T bills I have used this to calculate the rate of interest.
https://goodcalculators.com/treasury-bills-calculator/

I just calculated the annual yield using that link for bills I have bought. Some of the T bill rates match what I wrote on the print out I kept from Vanguard using that calculator. But some of the T bill rates differ from what I wrote when they were bought. The calculator is just giving a rate based upon what I paid and what the face value is at par so whether I do the calculation the day it settled or weeks later, the annual yield should always be the same. Is that correct or does it somehow change as time passes? That last sentence sounds crazy but I am confused why the rate I calced vs today is different.

 

[audreyh1]

Is the Investment Rate what we get when we bought the 13 week today? I ask cuz there are 4 different rates on that PDF.

Is there a link for TD that shows this info that is on a table vs a PDF?

The investment rate is the one to compare with other interest bearing instruments APR.

This treasury page explains several synonyms for "Investment Yield" as they term it there:
https://home.treasury.gov/resource-..._bill_rates&field_tdr_date_value_month=202210

Personally I just go with the investment rate as stated on the auction results tab on this page. You have to save a copy if you care because this page changes with each auction.
https://www.treasurydirect.gov/instit/instit.htm?upcoming

 

[Graybeard]

The investment rate is the one to compare with other interest bearing instruments APR.

This treasury page explains several synonyms for "Investment Yield" as they term it there:
https://home.treasury.gov/resource-..._bill_rates&field_tdr_date_value_month=202210

Personally I just go with the investment rate as stated on the auction results tab on this page. You have to save a copy if you care because this page changes with each auction.
https://www.treasurydirect.gov/instit/instit.htm?upcoming

Thanks Audreyh1. That TD link is what I was looking for, I looked all over TD but never found that page. I will bookmark that. I would assume the link for the Treasury calculator would show the same rate as the Investment Rate on TD? I bought some 13 week bills today but just have not had the time to look at the confirmation on Vanguard so I was wondering what the rate was, thank you.

As far as the other post I made, the calculator's rate should not change as time passes because it it based upon what was paid for X bills, right? It's confusing as I has a different % written down when I bought them using that calculator vs what I got tonight using the calculator.

 

[audreyh1]

I think the calculator number is very very close.

 

[jldavid47]

When I have bought T bills I have used this to calculate the rate of interest.
https://goodcalculators.com/treasury-bills-calculator/

I just calculated the annual yield using that link for bills I have bought. Some of the T bill rates match what I wrote on the print out I kept from Vanguard using that calculator. But some of the T bill rates differ from what I wrote when they were bought. The calculator is just giving a rate based upon what I paid and what the face value is at par so whether I do the calculation the day it settled or weeks later, the annual yield should always be the same. Is that correct or does it somehow change as time passes? That last sentence sounds crazy but I am confused why the rate I calced vs today is different.

Your Yield To Maturity changes as the market price of the bills change. If the YTM was originally, say, 3% and short term interest rates rise the following week, then the market value of your bill will drop and the YTM will rise. The 3% is the YTM you get from the time you bought to maturity. The YTM on any given date can be anything depending upon how the short term Treasury market is behaving.


My advice is if you are going to hold to maturity, don't be concerned about what the current YTM is.

 

[JoeWras]

We could talk about what all the numbers mean but unless you are a geek or a person who wants to get into treasury auctions, just worry about "Investment Rate". It is very close and comparable to a CD APR.

Over on bogleheads this topic has been coming up daily and there is indepth discussion. #Cruncher is one of their loyal users who gives the math down to the finest detail, if interested.

Personally, I think it is a waste of time to worry about it. Just look at "Investment Rate" and move on.

BTW: in typical Treasury tradition, they use "High Rate" to really mean "Winning Auction Bid". A simple change in terms would stop the confusion, but no, they love to throw shade the personal investors.

 

[jldavid47]

We could talk about what all the numbers mean but unless you are a geek or a person who wants to get into treasury auctions, just worry about "Investment Rate". It is very close and comparable to a CD APR.

Personally, I think it is a waste of time to worry about it. Just look at "Investment Rate" and move on.

+1

 

[jldavid47]

Today's 52-week Auction Results

Term:                         52-Week  
High Rate:                    3.955% 
Investment Rate*:             4.134% 
Price:                        $96.001056 
Allotted at High:             91.85% 
Total Tendered:               $95,542,617,200 
Total Accepted:               $38,268,057,200 
Issue Date:                   10/06/2022 
Maturity Date:                10/05/2023 
CUSIP:                        912796YJ2

*Equivalent coupon-issue yield

 

[audreyh1]

Personally, I think it is a waste of time to worry about it. Just look at "Investment Rate" and move on.

BTW: in typical Treasury tradition, they use "High Rate" to really mean "Winning Auction Bid". A simple change in terms would stop the confusion, but no, they love to throw shade the personal investors.

+3

 

[Graybeard]

When I went to bed last night I started to think about this and the light bulb went off! The calculator isn't wrong and the yield doesn't change, what I bought is locked in.

I have been buying T bills since May. I have bought at various times, no schedule just whenever. I buy 1 or 2 or 4 or 5 or 10, whatever so no consistency, each purchase is different as to the number of bills bought. I have been mixing purchases of 4 week, 8 week, 13 week and 26 week bills again randomly. So it is a bit of a "stew" as to what I own and it is in both my taxable and RO IRA.

But this is why I am getting a slightly different annual yield on a few purchases... while 95% of my purchases have been at auction, I did 2 or 3 on the secondary market to see how that worked. So here I am putting the numbers into the calculator and using 4 weeks for the time to maturity when the purchases on the secondary can be 34 days or 36 days! Needless to say, that is throwing off the annual yield when I tell the calculator the time period is 28 days and the % does not match what I calced when I bought them knowing the time period was not 4 weeks!

I have a mish mosh of all these random purchases and it is in both my taxable and RO IRA accounts. This is why I would print the confirmation from Vanguard and calc the % when they settled. Going back yesterday and forgetting a few of these were not for the 4 week time period was the problem.

I have stopped buying random numbers of T bills randomly re the calendar/account. Now each weekend I buy 14 3 month bills at auction, one week it is in my taxable account and the following week it will be in my RO IRA and no more secondary market purchases. I think staying on this schedule this will simplify what I hold and where it is held. In a month all but 1 purchase will have matured and all those random buys will be gone.