Treasury Bills, Notes, and Bonds Discussion

[jldavid47]

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.

 

[sengsational]

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).

 

[lawman]

Would failure to raise the debt ceiling pose a bigger risk to treasuries or FHLB issues?

 

[Fermion]

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%?

 

[lawman]

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?

 

[Fermion]

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?

Risk of nuclear war is higher....building a fallout shelter?

 

[Graybeard]

Orman was on CNBC on Wednesday IIRC and was all in on 13 and 26 week T bills not just 13 week.

 

[audreyh1]

This week’s T-bill auction results:

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
4-Week	No	912796Y78	01/31/2023	4.500%	4.579%	$99.650000
8-Week	No	912796Z85	01/31/2023	4.525%	4.620%	$99.296111
13-Week	No	912796YV5	01/26/2023	4.575%	4.693%	$98.843542
17-Week	No	912797FG7	01/31/2023	4.620%	4.757%	$98.472833
26-Week	No	912796Y29	01/26/2023	4.685%	4.865%	$97.631472
52-Week	No	912796ZY8	01/26/2023	4.470%	4.692%	$95.480333

Link to last weeks results: https://www.early-retirement.org/fo...d-bonds-discussion-115186-63.html#post2884258

 

[JoeWras]

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.

That would be TIPs.

 

[JoeWras]

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?

Let's leave that discussion to the other gloom and doom thread, please.

 

[lawman]

I have now purchased 20 - 25 Broker C. D's , corporate bonds, treasuries and FHLB notes..I have printed all my confirmations from Schwab..Although those have most of the information I need they do not tell me what the payment schedule is. I've gone back through my Schwab account history and I can see the interest payments I have received so far but based on the payment dates I cannot determine when or how often each security should pay. I would expect it would be monthy, quarterly, semi annually or at maturity but nothing tells me when each one pays..What am I missing?

 

[wolf]

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?

Interesting. As one poster mentioned. Down side, if rates go "above" the "5.65%" rate. I think, I may, "play" the game with a small portion of my
fixed investment funds. Or not. Will have to sleep on it.
But sounds reasonable to me.

 

[Popeye]

I have now purchased 20 - 25 Broker C. D's , corporate bonds, treasuries and FHLB notes..I have printed all my confirmations from Schwab..Although those have most of the information I need they do not tell me what the payment schedule is. I've gone back through my Schwab account history and I can see the interest payments I have received so far but based on the payment dates I cannot determine when or how often each security should pay. I would expect it would be monthy, quarterly, semi annually or at maturity but nothing tells me when each one pays..What am I missing?

On Fidelity there’s a fixed income tool. Look for something like that at Schwab. Google says they have an Investment Income Summary. That may tell you what you want to know.

 

[Freedom56]

I have now purchased 20 - 25 Broker C. D's , corporate bonds, treasuries and FHLB notes..I have printed all my confirmations from Schwab..Although those have most of the information I need they do not tell me what the payment schedule is. I've gone back through my Schwab account history and I can see the interest payments I have received so far but based on the payment dates I cannot determine when or how often each security should pay. I would expect it would be monthy, quarterly, semi annually or at maturity but nothing tells me when each one pays..What am I missing?

Your Schwab monthly statement will tell you the income by security and the amount of accrued income. You can also keep the info in a spreadsheet and manage it yourself.

 

[sengsational]

^ I agree that a spreadsheet is an appropriate tool, but I think the problem is reading the bond details and turning that into the set of cash flows promised.

Fidelity sends me a PDF with all of the bond specifics. Even if I just go into the buy screen and don't buy, they send it to me. Anyway, I wasn't born knowing how to translate those bond specs to a set of cash flows, but I learned how. In my case, setting up the XIRR set in Excel and fiddling with it until the rate I calculated equaled what Fidelity told me I would get if I bought the bond. It's basically the coupon rate times $1,000 on the right dates, but that's a simplification. And often it's not obvious what the dates are. And there always is a coupon payment at the end, IME. So if you have at least one coupon payment in hand, and it pays, say, every 6 months, you've got the payments known. If you just bought it, you'll need to look at the description to see the frequency and timing of the coupons. It's there, but not easy to recognize to my relativly untrained eye.

 

[gromit]

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?

The link is to a good article from Investopedia titled "Agency Bonds: Limited Risk and Higher Returns" The article includes a list of which bonds are state tax exempt and which are not.

https://www.investopedia.com/articles/bonds/07/agency_bonds.asp

 

[pb4uski]

I have now purchased 20 - 25 Broker C. D's , corporate bonds, treasuries and FHLB notes..I have printed all my confirmations from Schwab..Although those have most of the information I need they do not tell me what the payment schedule is. I've gone back through my Schwab account history and I can see the interest payments I have received so far but based on the payment dates I cannot determine when or how often each security should pay. I would expect it would be monthy, quarterly, semi annually or at maturity but nothing tells me when each one pays..What am I missing?

On Fidelity there’s a fixed income tool. Look for something like that at Schwab. Google says they have an Investment Income Summary. That may tell you what you want to know.

Your Schwab broker can periodically run a "Cash Flow Summary" report for you and send you a link to it... unfortunately it isn't something that you can do yourself.

I found it of limited use because it only schedules out interest and maturity payments for 12 months and I wanted to see more than that so I ended up doing a spreadsheet. Also, the report inexplicably excluded 4 agency bonds because "Algorithim cannot coumpute a value" and 2 CDs because "Missing coupon frequency" so it was not particularly useful.

 

[jazz4cash]

At Fidelity you can click on any fixed income product and the payment info pops up. If you click on an item from the ‘positions’ view you can choose from several fixed income views including cashflow analysis for all your positions. I can’t believe Schwab doesn’t have similar features.

 

[lawman]

Your Schwab monthly statement will tell you the income by security and the amount of accrued income. You can also keep the info in a spreadsheet and manage it yourself.

I have no clue about spreadsheets. I bought the below BoA note..Schwab screwed up my account regarding this issue. My daily change amount was off by the amount of my purchase and it did not show up on my list of securities. It took several days and several calls and no one could explain what went wrong except that it had to do with a "pricing issue". As of this morning it looks like they have the problem straightened out but I now have zero confidence in their competence..What I would like to know is when I should receive a payment from BoA for this note..
https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=FBAC5530521&symbol=BAC5530521

 

[pb4uski]

I have no clue about spreadsheets. I bought the below BoA note..Schwab screwed up my account regarding this issue. My daily change amount was off by the amount of my purchase and it did not show up on my list of securities. It took several days and several calls and no one could explain what went wrong except that it had to do with a "pricing issue". As of this morning it looks like they have the problem straightened out but I now have zero confidence in their competence..What I would like to know is when I should receive a payment from BoA for this note..
https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=FBAC5530521&symbol=BAC5530521

What you describe isn't unusual for new issue bonds. I put in a Fill or Kill order for a new issue bond (17290A7H7) on Wednesday and it sat in my open orders until it finally filled yesterday, but it won't actually fund until Jan 31, so I have a negative balance in my settlement account that I'll need to fill on or before Jan 31. I'll sell SWVXX on Monday to cover.

If you log onto Schwab and look up at CUSIP for the BoA issue that you purchased, you'll get the page below. Also see https://client.schwab.com/Trade/Bon...ND&IsFixedIncomeSearch=true&NewIssuesDN=false

The issue has a 5.4% coupon and pays interest semi-annually on 7/25 and 1/25 so you should receive $27/bond on 7/25/23 and every 6 months thereafter until maturity on 1/25/28 unless it is called before maturity. First call is at 100 on 1/25/24 and every six months therefter.

 

[lawman]

If you log onto Schwab and look up at CUSIP, you'll get the page below. Also see https://client.schwab.com/Trade/Bon...ND&IsFixedIncomeSearch=true&NewIssuesDN=false

The issue has a 5.4% coupon and pays interest semi-annually on 7/25 and 1/25 so you should receive $27/bond on 7/25/23 and every 6 months reafter until maturity on 1/25/28 unless it is called before maturity. First call is at 100 on 1/25/24 and every six months therefter.

Thanks!

 

[pb4uski]

My question is... what was you rationale for buying it if you didn't know this information?

 

[lawman]

My question is... what was you rationale for buying it if you didn't know this information?

The information I needed was pay schedule which this provides...

 

[jldavid47]

I have now purchased 20 - 25 Broker C. D's , corporate bonds, treasuries and FHLB notes..I have printed all my confirmations from Schwab..Although those have most of the information I need they do not tell me what the payment schedule is. I've gone back through my Schwab account history and I can see the interest payments I have received so far but based on the payment dates I cannot determine when or how often each security should pay. I would expect it would be monthy, quarterly, semi annually or at maturity but nothing tells me when each one pays..What am I missing?

Go on your Schwab account web page, go to Positions and click on the individual security. The popup should give you most of the details you want.

 

[lawman]

Go on your Schwab account web page, go to Positions and click on the individual security. The popup should give you most of the details you want.

It does indeed...Thanks