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Gov Bond yields in eTrade and Vanguard
Old 10-01-2022, 03:51 PM   #1
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Gov Bond yields in eTrade and Vanguard

I purchased the same exact bonds CUSIP 912796YF0 in the same denomination and time period (4-week) at eTrade and Vanguard and I ended up paying different amounts and resulting in different yields. This was under a new action and was listed under 4-week. So, am I calculating something wrong? Why the difference in Cost?

eTrade
Cost 4,987.71
Here is my calculation for yield as represented as a yearly amount
(5,000 - 4,987.71) / 4 weeks * 52 weeks / 5k = 3.19%

Vanguard
Cost 4,989.66
(5,000 - 4,989.66) / 4 weeks * 52 weeks / 5k = 2.68%

Treasury Direct Auction results:
912796YF0 Bill 4-Week 09/22/2022 09/27/2022 10/25/2022 99.793111
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Old 10-01-2022, 05:20 PM   #2
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You bought at auction at 2 brokers and got different prices? Your TD results match the Vanguard price FWIW
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Old 10-02-2022, 07:52 AM   #3
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Go pull up your eTrade confirmation - what execution price is it showing? My calculation shows 99.7542.

Although these were offered at auction, 912796YF0 was already existing having previously been sold at auction on 6/22 for 119-day maturity and again on 8/25 for 8-week. That means it was also trading in the secondary market. Maybe eTrade found that at the time the price in the secondary market was better than the auction price and somehow was able to give you that price?

Ignore the yields you've calculated. Because the maturity is so close, any tiny difference in price (about 0.04 in this case) is going to show what seems to be a big differential in yield.
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Old 10-02-2022, 08:21 AM   #4
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Originally Posted by njhowie View Post
Go pull up your eTrade confirmation - what execution price is it showing? My calculation shows 99.7542.
maybe check the trade date too
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Old 10-02-2022, 08:51 AM   #5
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Are there commissions and are they in the price? Your calculation assumes you lose the $2 13 times over the year, so of course the yield will be less.
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Old 10-02-2022, 09:10 AM   #6
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Are there commissions and are they in the price? Your calculation assumes you lose the $2 13 times over the year, so of course the yield will be less.
No, both eTrade and Vanguard have no commission on Treasury purchases whether at auction or in the secondary market.

Again, the issue here is that Vanguard gave the auction price with no commission or fees, eTrade charged even lower than that.
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Old 10-02-2022, 02:45 PM   #7
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Originally Posted by RetMD21 View Post
maybe check the trade date too
Here are the transactions date and cost. Still curious why eTrade was less expensive.

eTrade
09/19/22 Bought 5000 of 912796YF0 @ $99.7542
Vanguard
09/22/2022 5,000.0000 shares of U S TREASURY BILL 0% 10/25/22 06/28/22 at $99.79
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Old 10-02-2022, 03:49 PM   #8
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The 4 week bill 912796YF0 wasn't announced until 9/20, your buy was in the secondary market on 9/19.
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Old 10-02-2022, 04:37 PM   #9
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So, when you placed the order with eTrade, are you sure you did it signing up for the auction, or might you have possibly placed it as an order for the bonds in the secondary market on 9/19?

Further, if you adjust the holding period on the eTrade bonds, to make it 4 weeks + 3 days, the yield will likely come down a bit making them closer to each other.
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Old 10-03-2022, 07:54 AM   #10
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Originally Posted by wg500usa View Post
I purchased the same exact bonds CUSIP 912796YF0 in the same denomination and time period (4-week) at eTrade and Vanguard and I ended up paying different amounts and resulting in different yields. This was under a new action and was listed under 4-week. So, am I calculating something wrong? Why the difference in Cost?

eTrade
Cost 4,987.71
Here is my calculation for yield as represented as a yearly amount
(5,000 - 4,987.71) / 4 weeks * 52 weeks / 5k = 3.19%

Vanguard
Cost 4,989.66
(5,000 - 4,989.66) / 4 weeks * 52 weeks / 5k = 2.68%

Treasury Direct Auction results:
912796YF0 Bill 4-Week 09/22/2022 09/27/2022 10/25/2022 99.793111
Bond prices vary day to day and you got a better deal in the secondary market as grasshopper pointed out
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