Treasury Bills, Notes, and Bonds Discussion

[Dash man]

I don’t think Schwab charges a fee for buying at auction. Not sure about Fidelity. Buying on the market includes markups imbedded in the price.

[jazz4cash]

Some posters in the other thread gave us some handy links to Fidelity and Vanguard Fixed Income Yield Tables that do not require login.

Credit to LiveFree for this one (modified to land on the YIELDS tab)


https://fixedincome.fidelity.com/ftg...|highest-yield

Credit to DisneySteve for the Vanguard version...

https://personal.vanguard.com/us/FixedIncomeHome

The Fidelity link is very limited beyond the opening page but the Vanguard links in the yield table are active. Interesting

[JoeWras]

Quote:

Originally Posted by jazz4cash A 7 yr note (issued in Sept 2015) is trading in the secondary market right now. It matures in Sept 2022 and it will be priced comparably to every other treasury that matures in Sept 2022 regardless of the original term. Edit: this statement is consistent with JoeW's reply above.

I always feel better when two posts simultaneously hit, and they are consistent.

[disneysteve]

Quote:

Originally Posted by JoeWras It's a bit more complicated and you have to pay attention to minimums, and perhaps explore the depth of book.

Can you explain more here?

What minimums are you referring to? When I go in to buy treasuries, I see that they're sold in $1,000 increments and I just select the number I want. Are there situations where you can't buy less than a certain number? I haven't encountered that.

And what is depth of book? I think it has something to do with how actively traded something is but I'm honestly not sure or how it applies here.

[pb4uski]

Sometimes the minimum purchase quantity is more than one $1,000 bond... sometimes 25 $1,000 bonds and sometimes more.

[disneysteve]

Quote:

Originally Posted by pb4uski Sometimes the minimum purchase quantity is more than one $1,000 bond... sometimes 25 $1,000 bonds and sometimes more.

Thanks. I didn't realize that happened as I haven't encountered it.

[foxfirev5]

Quote:

Originally Posted by pb4uski Sometimes the minimum purchase quantity is more than one $1,000 bond... sometimes 25 $1,000 bonds and sometimes more.

When using the Fidelity site I frequently have to click on the "depth of book" link which will bring up all the current quantities including those that are lower than the initial quote screen. I've been adding to one T Bill holding all year for next years withdrawal. The last time I went to purchase 5 more bills ($5000) the minimum quantity listed was 1000. I went to the depth of book and clicked on a minimum of 1 and bought it. A few pennies more but nothing significant.

[pb4uski]

I remember that now that you mention it.

[wrigley]

Quote:

Originally Posted by JoeWras I always feel better when two posts simultaneously hit, and they are consistent.

Thanks gents. I just ASSumed A 7 year note had to be held for 7 years. It's that learning curve I'm going through!

Mike

[jazz4cash]

Quote:

Originally Posted by disneysteve Thanks. I didn't realize that happened as I haven't encountered it.

Looking at the Vanguard yield table link that you posted in the other thread….If you click one of the treasury rates listed the page that opens will display a list of bonds available in that maturity range. The second column of the table is “Min”. That is the minimum quantity that you can buy or sell at the quoted bid or asking price. Frequently there are several sellers with different minimums. At Vanguard it will say “show more” but I haven’t seen that too often. At Fido they have a depth of book column and there is almost always several sellers listed. The initial price you see is always the lowest but it may require a large minimum. Opening the depth of book will list sellers with lower minimums but the price is generally a few pennies higher.

https://personal.vanguard.com/us/FixedIncomeHome

[Vincenzo Corleone]

I just attempted to by a 1-year T-Bill on Vanguard at auction. The auction schedule on Vanguard showed that the auction was open on 9/1/2022 (today), but it didn't show any details, nor did it allow me to select it in order to buy it. Anyone know why?

[plsprius]

Quote:

Originally Posted by Vincenzo Corleone I just attempted to by a 1-year T-Bill on Vanguard at auction. The auction schedule on Vanguard showed that the auction was open on 9/1/2022 (today), but it didn't show any details, nor did it allow me to select it in order to buy it. Anyone know why?

Generally, you have to have your auction order in before the cut-off time. Usually that is about the same time that the equity market opens on the day of the auction, but it can be earlier. I think Vanguard sometime shows the cut-off time at midnight before the day's auction.

[JoeWras]

Quote:

Originally Posted by Vincenzo Corleone I just attempted to by a 1-year T-Bill on Vanguard at auction. The auction schedule on Vanguard showed that the auction was open on 9/1/2022 (today), but it didn't show any details, nor did it allow me to select it in order to buy it. Anyone know why?

This link is your friend: https://www.treasurydirect.gov/insti...t.htm?upcoming
Or a deeper schedule: https://home.treasury.gov/system/fil...n-Schedule.pdf

It is announced today. It closes on Tuesday at 9:30am. (Don't wait that long.) Normally, you'll see Vanguard and Fidelity open up orders on Thursday for a Monday close. But Monday is labor day, so although the announcement is on the typical Thursday, the closing is pushed to Tuesday. You should see it open for orders tomorrow.

At least that was the pattern I've seen for other Monday holidays. Seems like Vanguard takes the close date minus 4 days instead of keying off the announcement. But I'm just guessing.

[Vincenzo Corleone]

Quote:

Originally Posted by plsprius Generally, you have to have your auction order in before the cut-off time. Usually that is about the same time that the equity market opens on the day of the auction, but it can be earlier. I think Vanguard sometime shows the cut-off time at midnight before the day's auction.

The auction supposedly opened today. The cutoff is 9/6/2022.

[JoeWras]

Quote:

Originally Posted by Vincenzo Corleone The auction supposedly opened today. The cutoff is 9/6/2022.

As I mentioned, when there is a Monday holiday, Vanguard ignores their own word "open" and delays the actual open by a day.

BTW, for those who like auctions and want to put in orders way ahead (months), Treasury Direct allows it.

[Dash man]

Quote:

Originally Posted by Vincenzo Corleone The auction supposedly opened today. The cutoff is 9/6/2022.

I see the treasuries for next week’s auction are listed on Schwab, but not on Fidelity.

[audreyh1]

Some background info for buying 13-week or 26-week treasuries at auction through Fidelity for those who haven’t done it. A little tutorial if you will. Fidelity offers this service plus an auto roll feature for free.

BTW I only buy t-bills during periods of rising interest rates when high yield savings accounts, money market funds and short-term CDs can’t seem to catch up. Once rates stabilize I usually move back to CDs.

I’ve been buying 13 week and 26 week t-bills at auction. These are auctioned on Monday, or Tuesday if Monday is a market holiday.

The next Monday auction is normally announced by the Treasury Department on a Thursday. At some point on Thursday the treasuries to be auctioned will show up under the “New Issue” tab in Fidelity’s fixed income offerings. The duration of each treasury is indicated by the maturity date.

At any time between Thursday and very early Monday morning, you can click on the Trade button and simply enter how much you want in $1000s. So for $50,000 you would enter quantity 50. Until (? hours before) the auction goes through you can cancel your order. At Fidelity you can also select Auto Roll if you want the t-bill to automatically roll over to the same duration when it matures.

For me this takes maybe 10 seconds.

Late Monday morning you get a trade confirmation with the details and you can also look at the Treasury Direct auction results. I like this page which gives the next upcoming auctions as well as the latest auction results including price and yield. https://www.treasurydirect.gov/insti...t.htm?upcoming

The Monday trade settles on the following Thursday.

These are zero coupon bills so you will be paying slightly under the amount you ordered, then you will be returned the full amount upon maturity, and the difference is your interest payment. The auction determines exactly the interest rate you will pay, it’s not known exactly ahead of time. Normally it’s very close to what the secondary market is trading maybe even slightly above in my experience. Looking at the recent secondary market is really the only way to gage your likely yield ahead of time. Here is a handy little calculator for determining your equivalent coupon and annualized yield. https://goodcalculators.com/treasury-bills-calculator/

[audreyh1]

Quote:

Originally Posted by Dash man I see the treasuries for next week’s auction are listed on Schwab, but not on Fidelity.

They will show up on Fidelity today in my experience.

[audreyh1]

Quote:

Originally Posted by Vincenzo Corleone The auction supposedly opened today. The cutoff is 9/6/2022.

The auction has not opened yet. It has been announced. You can place an order a few days ahead of the auction through yiur broker which won’t occur until Monday morning, or Tuesday morning if Monday is a holiday.

[Dash man]

Quote:

Originally Posted by audreyh1 They will show up on Fidelity today in my experience.

I know. It’s just a pain for me today since my DW is away with her sisters for the weekend. It’s her IRA account, and without her phone I can’t log in, so I’m trying to keep this login going before it times out. First world problem! [emoji23]