Does it make sense to sell this T bill and buy a CD?

[Graybeard]

First of all, I never sold a T bill. Looking at Vanguard's secondary market right now and I am LOST!

My T bill is CUSIP 912796-ZY-8 bought at auction if this helps. It is a 1 year bill due 1/25/24, annual yield is 4.692% and I bought $75k in my IRA so there are no tax consequences re the profit.

If I sell this do I get the interest it earned plus the sale price or just the sale price and then I calculate my profit from the $71,610.25 I paid for it?

Can you buy/sell outside of market open hours?

There are just 2 bills close to my maturity date for comparison both mature 1/31/2024. Column 6 is bid/ask, YTW then YTM.


Do I set the bid/ask?

Is the profit selling this worth it considering I can get a 5% or 5.05% 1 year CD?

I am sure I have another 100 questions but let's start here.

Thank you.

 

[joesxm3]

Similar question.

I am under the impression that the current market price of a T-bill is simply the original adjusted for the current interest rate.

So is it correct that if you sell a T-bill and then just buy one at the current rate that it is basica!ly a break even proposition?

I realize that there may be some arbitrage opportunity if you reinvest in a different type of instrument or asset class.

 

[copyright1997reloaded]

First of all, I never sold a T bill. Looking at Vanguard's secondary market right now and I am LOST!

My T bill is CUSIP 912796-ZY-8 bought at auction if this helps. It is a 1 year bill due 1/25/24, annual yield is 4.692% and I bought $75k in my IRA so there are no tax consequences re the profit.

If I sell this do I get the interest it earned plus the sale price or just the sale price and then I calculate my profit from the $71,610.25 I paid for it?

Can you buy/sell outside of market open hours?

There are just 2 bills close to my maturity date for comparison both mature 1/31/2024. Column 6 is bid/ask, YTW then YTM.
View attachment 45581

912796ZY8 was sold @ 95.480333. It is at (about) $96.304 as of close of trading today. So your "interest" will be 96.304 - 95.480333 per $100 of bond (if sold at that price). You can calculate what your return (so far) was on that using excel (Yielddisc function). Fido's bond analysis tool will also show the remaining yield (4.524%) for this cusip as of end of day today.

Yes, if you sold it (assuming the 96.304 price) and bought a 5.0% or 5.1% CD of similar term, you would earn more interest than holding the T-Bill. (as 5.0% is higher than 4.524%). It is up to you whether the additional interest is worth the work and the other considerations when comparing treasuries w/bank CDs (taxes, risk, marketability, ...)

 

[copyright1997reloaded]

Similar question.

I am under the impression that the current market price of a T-bill is simply the original adjusted for the current interest rate.

So is it correct that if you sell a T-bill and then just buy one at the current rate that it is basica!ly a break even proposition?

I realize that there may be some arbitrage opportunity if you reinvest in a different type of instrument or asset class.

If you sold a treasury with 1 month left on it, and bought a 4 month or 6 month T-Bill, you would be getting more yield as the yield curve is not inverted in terms of 1 month vs. 4 and 6 months. (That is, more yield by increasing duration at this point of the curve.)

 

[gcgang]

It looks like the securities you showed bid/ask for are not TBills, they are Treasury Notes. The notes have a coupon, upon which accrued interest is calculated. A TBill has no coupon, just sells at a discount.

Looks like you are giving up around 4.74% if you sell. The bid is the price at which you sell. I don’t think you can enter a limit price. Sometimes you can ask to get a bid, but I think that’s what you’re looking at. When I sell Tsy’s before maturity I look at the bid, and either take it or get another bid later.

Can’t you just enter a sell order for your TBill, and it should fill in the price and YTM you’d be giving up by selling.

I often do this, buying a 6 month at 5% and then selling when it has a month to go at 4%, for example. By doing this, I make slightly more than 5% as I’m getting a slight premium selling at a lower yield. Then I roll back out to 4-9 months at a higher yield. This yield enhancement works when the yield curve is positive.