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Old 01-23-2023, 03:32 PM   #1261
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For better or worst, I'm going with a 52 week for tomorrow. Results should be interesting.

Last month was 4.741%. Market says it will be close... may a few bp lower. We shall see.

I'm going to guess secondary market players hate our auction talk when we speculate on our "prize." Ha ha.
I'm also getting into the 52 week auction tomorrow. Picked up my allocation in the 26 week today. I'm just plodding along following my plan.

I've found that recently I've been doing better by buying at auction than in the secondary market. It is at least partially due to the fact that at auction I don't lose the bid/ask spread.
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Old 01-23-2023, 03:40 PM   #1262
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I keep looking at those new issue Agency bonds, llke;
FEDERAL FARM CR BKS BOND
5.65000% 01/24/2031

Sure it is callable on the first coupon of July this year, but the coupon is 5.65%, maybe you get lucky and goes longer term, but why would one not buy these and consider it as a 6 month bond? I did buy some a bit ago at 6.5% coupon, but callable in May.

I do not see why these would not be as safe as a t-bill, but with much higher yield. Help me understand why this would not be a short term play?
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Old 01-23-2023, 07:12 PM   #1263
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Bought some 26 week T bills today and tomorrow I'll buy my first 52 week T bills.
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Old 01-24-2023, 06:45 AM   #1264
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I keep looking at those new issue Agency bonds, llke;
FEDERAL FARM CR BKS BOND
5.65000% 01/24/2031

Sure it is callable on the first coupon of July this year, but the coupon is 5.65%, maybe you get lucky and goes longer term, but why would one not buy these and consider it as a 6 month bond? I did buy some a bit ago at 6.5% coupon, but callable in May.

I do not see why these would not be as safe as a t-bill, but with much higher yield. Help me understand why this would not be a short term play?
I also have been buying these along with 6 month zero coupons on the Schwab platform. Also using SCOXX as a money market liquid account paying 4.17% as of today. 25 bps lower than SNAXX but I like the holdings better.
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Old 01-24-2023, 11:06 AM   #1265
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And there it is.

52 week bill comes in at 4.692% down from 4.741% from last month.
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Old 01-25-2023, 05:25 AM   #1266
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And there it is.

52 week bill comes in at 4.692% down from 4.741% from last month.
I'm still pretty happy with that. I'm glad I skipped the 2-year auction this month, however. The yield dropped from 4.373% last month to 4.139% in yesterday's auction. Even SWVXX is paying 4.27% right now and that will likely go up after the next Fed meeting.
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Old 01-25-2023, 08:20 AM   #1267
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I have my order in for the 17-week auction today. We’ll see if it stays above 4.75%.

ETA: yes, came in near my expectation 4.757%, just a smidge above last week.
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Old 01-25-2023, 10:28 AM   #1268
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I'm glad I skipped the 2-year auction this month, however. The yield dropped from 4.373% last month to 4.139% in yesterday's auction.
FWIW, if I wanted to lengthen to 2 years right now there are plenty of non-callable brokered CDs at Schwab paying 4.5%. That's 36 basis points better than a 2-year T-Note.
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Old 01-25-2023, 11:55 AM   #1269
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I toyed with buying a 17 week in my IRA, but decided just to take the divvies from the settlement fund at the end of the month and roll it into my Roth. I'll reconsider in a week or two.

I have a T bill coming due in my house account, and am looking at putting in an order for a 13 week tomorrow.

I am letting a few smaller T bills in my taxable account mature (sticking them in a money market temporarily) to lump them together in a larger bill. I am then going to have to decide on their maturity.

After the next smaller bond matures, "anybody else" who matures this year is going to have to contribute a portion of their interest earnings to the tax account.
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Old 01-25-2023, 07:57 PM   #1270
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When a T bill that was bought in 2022 matures in 2023, I assume the interest is taxable (federal level) in the year it matured ie 2023 in this example?

It doesn't make sense that some of the interest that was earned in 2022 is taxable in 2022 and the interest earned in 2023 is taxable in 2023. Seems CD interest was taxed in each year that is why I am asking.
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Old 01-25-2023, 08:08 PM   #1271
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When a T bill that was bought in 2022 matures in 2023, I assume the interest is taxable (federal level) in the year it matured ie 2023 in this example?

It doesn't make sense that some of the interest that was earned in 2022 is taxable in 2022 and the interest earned in 2023 is taxable in 2023. Seems CD interest was taxed in each year that is why I am asking.
Yes, the interest is paid to you in 2023 and taxable that year. No funny business.

Generally it’s related to duration. 12 months or less it can be the one time interest payment. Longer than 12 months and CDs will pay interest in Dec if they haven’t already paid that year.

Even if the interest payment is kept within the CD, you still owe tax on the interest.
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Old 01-25-2023, 08:10 PM   #1272
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As long as you hold it to maturity, yes.
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Old 01-25-2023, 08:20 PM   #1273
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It doesn't make sense that some of the interest that was earned in 2022 is taxable in 2022 and the interest earned in 2023 is taxable in 2023. Seems CD interest was taxed in each year that is why I am asking.


Think of it this way…..income is in the year it is received, including interest income. If you had to pay tax on interest not yet received, it could be a hardship to come up with funds to pay the taxes.
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Old 01-25-2023, 09:07 PM   #1274
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I think there are some situations in which there is “imputed interest” that hasn’t actually been paid, but fortunately not with your regular T-bills or CDs.
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Old 01-26-2023, 08:06 AM   #1275
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Saw Suzie Orman today on Morning TV touting short term treasuries, 3 months in particular. She says rates are still going up and that one should not lock in too long.
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Old 01-26-2023, 08:50 AM   #1276
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Saw Suzie Orman today on Morning TV touting short term treasuries, 3 months in particular. She says rates are still going up and that one should not lock in too long.
The best value proposition at the moment is in the 6-month bill. Let's take this week's auctions for a simplistic example.

The 13 week T-bill paid 4.693% and the 26 week paid 4.865% this week. That's a differential of 17.2 basis points which means 13 weeks down the road the yield on the rolled over 13 week T-bill would have to be at least 5.037%. Could that happen? Sure. Will it? I have no idea and neither does Suze.

I'll happily take my chances on the 26 week T-bills.
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Old 01-26-2023, 09:20 AM   #1277
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I keep looking at those new issue Agency bonds, llke;
FEDERAL FARM CR BKS BOND
5.65000% 01/24/2031

Sure it is callable on the first coupon of July this year, but the coupon is 5.65%, maybe you get lucky and goes longer term, but why would one not buy these and consider it as a 6 month bond? I did buy some a bit ago at 6.5% coupon, but callable in May.

I do not see why these would not be as safe as a t-bill, but with much higher yield. Help me understand why this would not be a short term play?
It's hard to imagine why not take the short term play, treating it as a 26 week issue at 6.5%. But it's not quite as good as a 26 week issue because you've got a down-side if rates exceed 6.5%, right? It's hard to imagine rates increasing such that 6.5% looks puny, but not impossible. My knowledge of when calls happen is not well informed, but logically, it makes no sense not to call the bond if rates go against the issuer by any significant magnitude. If it's a close call for the issuer, then you could probably replace it with something similar, but if it's a slam-dunk, you'd have to buy something at the lower prevailing rates (equivalent to the short non-callable).
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Old 01-26-2023, 09:26 AM   #1278
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Would failure to raise the debt ceiling pose a bigger risk to treasuries or FHLB issues?
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Old 01-26-2023, 09:50 AM   #1279
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Would failure to raise the debt ceiling pose a bigger risk to treasuries or FHLB issues?
Raise the risk from what? 0% to 0.00000001%?
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Old 01-26-2023, 09:58 AM   #1280
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Raise the risk from what? 0% to 0.00000001%?
With each side having their heels dug in deeper than ever before I think we are likely to go places we have never been..How long has it been since we voted so many times before electing a House Speaker?
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