Best CD, MM Rates & Bank Special Deals Thread 2022 - Please post updates here

[11522914]

I started with 13s to build a weekly ladder, and now I'm moving to 26s as the 13s roll off. I also threw in a note or two. As this rate bump matures, I may move to more 2 and 3 year notes. It is a bit nerve wracking as it involves guessing the CPI, the Fed's reaction to the CPI, and the money market.

I'm curious why people are locking in even 6 month terms as the fed has been clear about continuing interest rate increases.

I've been doing 1 - 2 month Treasury bills around the next Fed meeting. And they keep going up nicely. Just did a one month for 2.31%.

Granted 6 months are about 1% higher so I can see that. I do get it's hard to guess how far this goes.

I have been buying longer term corporate bonds when I can get a good deal. That maybe one reason I'm doing shorter terms to keep my powder dry if/when the good deals on corporate bonds come back.

Just want to make sure I'm not missing something.

Thanks

 

[audreyh1]

I’m rolling over every 3 months as long as short-term treasuries are beating the other options available. I’ve staggered (laddered) my 6 month t-bill purchases. Some initial ones were 3 months. Good enough for me.

6-month is kind of a sweet spot right now as 1 year and 2 year aren’t yielding much more and the 5 year is actually yielding less.

 

[JoeWras]

I'm curious why people are locking in even 6 month terms as the fed has been clear about continuing interest rate increases.

Well I'm not 100% accurate in my ladder composition. Let's just say as my 13s mature, I'm rolling more into 26s. Why? Because it fits the ladder and despite all the signals, I don't have a perfect guess of the future. The mix of 26s capture a bit of insurance against unexpected downward shocks.

I could ask the same about people buying nothing but 13s. Why not just buy nothing but 8s? And if you are buying nothing but 8s, why not 4s? And so on.

We saw what happened in the summer when the rise took a pause and even dipped a bit. It's a market, and the market read the CPI data and anticipated something different than what Powell said. Powell also has a habit of changing his tune real quick. Remember earlier this year he basically said it would be 25 basis points at a time, although he did leave an out for possibly higher jumps. He used the out-clause right away.

 

[11522914]

Well I'm not 100% accurate in my ladder composition. Let's just say as my 13s mature, I'm rolling more into 26s. Why? Because it fits the ladder and despite all the signals, I don't have a perfect guess of the future. The mix of 26s capture a bit of insurance against unexpected downward shocks.

I could ask the same about people buying nothing but 13s. Why not just buy nothing but 8s? And if you are buying nothing but 8s, why not 4s? And so on.

We saw what happened in the summer when the rise took a pause and even dipped a bit. It's a market, and the market read the CPI data and anticipated something different than what Powell said. Powell also has a habit of changing his tune real quick. Remember earlier this year he basically said it would be 25 basis points at a time, although he did leave an out for possibly higher jumps. He used the out-clause right away.

Makes sense. Thanks

 

[Gotadimple]

Email this morning from Live Oak Bank, yield on their High Yield Savings moves to 2.0% starting 8/30, up from 1.75% announced 8/5. One year CD 2.75%, 2-year CD 3.00%. Two year CD rates seem to be the sweet spot for this institution.

I am aware that Treasuries are yielding higher. This account is for a Homeowners Association. We cannot use Treasury Direct, and a brokerage account is too cumbersome an option.

- Rita

 

[copyright1997reloaded]

I'm curious why people are locking in even 6 month terms as the fed has been clear about continuing interest rate increases.

I've been doing 1 - 2 month Treasury bills around the next Fed meeting. And they keep going up nicely. Just did a one month for 2.31%.

Granted 6 months are about 1% higher so I can see that. I do get it's hard to guess how far this goes.

I have been buying longer term corporate bonds when I can get a good deal. That maybe one reason I'm doing shorter terms to keep my powder dry if/when the good deals on corporate bonds come back.

Just want to make sure I'm not missing something.

Thanks

You answered your own question (see bold).
IF rates move up like they have over the last six months, staying even shorter than six months will be a good decision. For example, on 2/28/22 the six-month rate was 0.69%. That would be a bit of an ouch compare to todays 2.45% on 1-month bills.

However, I am betting that while the rates are likely to still move higher, my six-month @ 3.3% will be better than one-month @ 2.45% then 2nd month at ... and third month at ... and so on. Could I be wrong? Absolutely. Which is why ALL of my money hasn't gone for the last 2 weeks of six-month auctions and why I have some shorter and some waiting to invest (getting a paltry 1.85% at Ally).

 

[audreyh1]

^^^Exactly!

 

[Graybeard]

Is that because you missed the auction? I use secondary market for that. It’s easier (for me) to match liabilities (known extraordinary expenses like property taxes, insurance premiums). I can pick a maturity very close to the due date. Actually I’m still waiting for someone to explain the advantages of buying at the auction. I start earning immediately, too

Yes, by about 14 hours!

I never bought on the secondary market and I don't understand it. The Vanguard display for new issue T bills is simple to understand, I just bought my first T bills in May. The display for the secondary market looks confusing, I don't understand what all the info means so I don't know how to decide what makes sense to buy. I'd probably buy something that is a bad choice. A good thread would be how to buy on the secondary market and how to understand all that info.

 

[Graybeard]

I took the money from selling some shares of a fund at a loss for the purpose of TLH and had been keeping that money in the Settlement fund but today I bought 40 1 month T bills. When they mature, I can put the money back into that fund. Those shares were bought at the highest nav in 2 years and were just screaming to be sold as that spec id was the worst purchase of all the purchases of that fund.

 

[Dash man]

Yes, by about 14 hours!

I never bought on the secondary market and I don't understand it. The Vanguard display for new issue T bills is simple to understand, I just bought my first T bills in May. The display for the secondary market looks confusing, I don't understand what all the info means so I don't know how to decide what makes sense to buy. I'd probably buy something that is a bad choice. A good thread would be how to buy on the secondary market and how to understand all that info.

Get “The Bond Book” by Annette Thau. We’ll written, easy to understand and worth the small investment.

 

[jazz4cash]

Yes, by about 14 hours!

I never bought on the secondary market and I don't understand it. The Vanguard display for new issue T bills is simple to understand, I just bought my first T bills in May. The display for the secondary market looks confusing, I don't understand what all the info means so I don't know how to decide what makes sense to buy. I'd probably buy something that is a bad choice. A good thread would be how to buy on the secondary market and how to understand all that info.

I think if you explore the VG bond pages you’ll find it easy to comprehend. Start with the yield table and look for the maturity closest to the one you just missed. Hover or click on it and a list of similar issues will pop up. The price/yield will be very close to the auction result. Hover/click/ check the glossary of terms. Call VG or post specific questions here. No need to miss the opportunity just because you missed the auction. I use Fido but VG is similar.

 

[JoeWras]

Thanks jazz4cash. Like Graybeard, I'm slowly dipping toes in these markets. I think it becomes simple for one who has done it. For a first time user, it can be perplexing. Kind of like driving a car with a manual transmission.

I have attached some relevant screen shots. If you don't mind, I'm going to pick apart your instructions and discuss them, referring to the picture, trying to do what Graybeard wants to do. Anyone, please correct me if I am wrong.

I think if you explore the VG bond pages you’ll find it easy to comprehend. Start with the yield table and look for the maturity closest to the one you just missed. Hover or click on it and a list of similar issues will pop up.

OK, the bottom of my screenshot is part of the yield table that comes up when using the "Quick Search" tab. I click the highlighted, in order to access the 3 month T-bill I just missed buying yesterday. A list of similar issues do pop up, including that 13 week that matures 12/1. So far, so good.

The price/yield will be very close to the auction result. Hover/click/ check the glossary of terms. Call VG or post specific questions here. No need to miss the opportunity just because you missed the auction. I use Fido but VG is similar.

I think this is where a lot of us lose it and grind the gears. We've gotta lot of numbers. Min/max buy/sell. Maturities. Coupon numbers (in this case, all 0.0000). And so on.

For the highlighted sections in my example, it appears I could buy a bond for 99.285 that has an effective yield of 2.885. Right? Above this you see the auction result which is 2.941%. Close, but not the same as a result of the "extra hands" in the secondary market effectively taking their cut, right?

Speaking of which, the "bid/ask" which is really sell/buy adds confusion for the novice. When buying, I really only care about ask, right? And this spread is a consequence of the extra hands in the market, in this case the market maker, getting their cut of the pie for enabling this transaction, right?

----

I think for zero coupon treasuries this mostly makes sense. But some is still confusing, so check my following statements: You buy in increments of $1000, but the price displayed is per $100. Confusing.

Corporates use the same $100 quote, right? I think looking at corporates or treasuries with coupons adds another dynamic because the "yield to maturity," especially for high coupon items with very short maturities, can be negative. I assume this is because a coupon payment is about to drop? Confusing...

 

[jazz4cash]

For the highlighted sections in my example, it appears I could buy a bond for 99.285 that has an effective yield of 2.885. Right? Above this you see the auction result which is 2.941%. Close, but not the same as a result of the "extra hands" in the secondary market effectively taking their cut, right?
OK, this is a challenge for me, but let's see. The difference between the auction result may be due to "extra hands" but also whatever changes have occurred in the market since the auction

Speaking of which, the "bid/ask" which is really sell/buy adds confusion for the novice. When buying, I really only care about ask, right? And this spread is a consequence of the extra hands in the market, in this case the market maker, getting their cut of the pie for enabling this transaction, right?
Yes you are only concerned with the ask. The market only works if the ask is higher than the bid at any point in time. That's why these issues are so easy to sell.
----

I think for zero coupon treasuries this mostly makes sense. But some is still confusing, so check my following statements: You buy in increments of $1000, but the price displayed is per $100. Confusing.
I agree, it is confusing and it is the same for a corporate bond

Corporates use the same $100 quote, right? I think looking at corporates or treasuries with coupons adds another dynamic because the "yield to maturity," especially for high coupon items with very short maturities, can be negative. I assume this is because a coupon payment is about to drop?
Confusing...
Not sure about this one, but your assumption could be correct

My replies to some of your comments are above in RED

I only bought my first Treasury at Fidelity a few months ago so I am still learning. I am finding the VG site much, much harder to navigate and less helpful. I did see the list of Treasuries in the format you pasted (which is familiar) but I can't get back to it. I don't see much in the way of educational resources either.
The issue you posted (ending in P64) is available at Fido right now at a yield of 2.91 <That yield is for a qty of 1000 bonds. For a single bond the yield is the same as VG

 

[jazz4cash]

Oh, forgot to mention the Min/Max column. It displays the minimum and maximum quantity of bonds available. The ask price is always the best available but sometimes the minimum quantity is high. You may be able to buy smaller quantities at a higher price. I see a "show more" button on VG that will return options for smaller quantities (I think). At Fido there is a depth of book column and icon.

 

[COcheesehead]

Oh, forgot to mention the Min/Max column. It displays the minimum and maximum quantity of bonds available. The ask price is always the best available but sometimes the minimum quantity is high. You may be able to buy smaller quantities at a higher price. I see a "show more" button on VG that will return options for smaller quantities (I think). At Fido there is a depth of book column and icon.

The “show more” on Fidelity is known as depth of book and shows a little open book icon. It will list all the lots available some with smaller minimums. It will always show the corresponding yield which will vary by lot.

 

[lawman]

What is Fido?

 

[COcheesehead]

What is Fido?

Fidelity

 

[RetireAge50]

Got my feet wet with my first treasury purchase this morning on the secondary market. 3.237% YTW Feb 2023 maturity.
I’m thinking about buying the 26-week bill in $25,000 increments over the next 12 auctions (not on the secondary).
Still trying to figure it out. I guess I should buy some other shorter term maturities while I am building this out. In the meantime sitting in VMFXX.

 

[JoeWras]

Got my feet wet with my first treasury purchase this morning on the secondary market. 3.237% YTW Feb 2023 maturity.
I’m thinking about buying the 26-week bill in $25,000 increments over the next 12 auctions (not on the secondary).
Still trying to figure it out. I guess I should buy some other shorter term maturities while I am building this out. In the meantime sitting in VMFXX.

2 and 1 month T-Bills are open today if you want to try an auction buy. Cut off tomorrow morning at 9:30.

 

[JoeWras]

Oh, forgot to mention the Min/Max column. It displays the minimum and maximum quantity of bonds available. The ask price is always the best available but sometimes the minimum quantity is high. You may be able to buy smaller quantities at a higher price. I see a "show more" button on VG that will return options for smaller quantities (I think). At Fido there is a depth of book column and icon.

Thanks!

I forgot I could bring up the live bond trading display on Fidelity through my HSA. It gives me a chance to compare Fidelity and Vanguard live. Turns out the different platforms both have pluses and minuses.

 

[wrigley]

Got my feet wet with my first treasury purchase this morning on the secondary market. 3.237% YTW Feb 2023 maturity.
I’m thinking about buying the 26-week bill in $25,000 increments over the next 12 auctions (not on the secondary).
Still trying to figure it out. I guess I should buy some other shorter term maturities while I am building this out. In the meantime sitting in VMFXX.

I am no longer a "T-Bill Virgin' either. I bought my first 13-week at 2.715%. I'm not going to pretend I really know what I did so I figured go short and see how this all plays out. Worse come to worst I might learn something!

Mike

 

[disneysteve]

I never bought on the secondary market and I don't understand it. The Vanguard display for new issue T bills is simple to understand

Vanguard makes buying on the secondary market super easy also. You just choose the maturity you want and get a list of the available options, pick the one you want and for how much and you're done. Let me know if you have any questions about it, but it's very user-friendly and self-explanatory.

 

[COcheesehead]

Vanguard makes buying on the secondary market super easy also. You just choose the maturity you want and get a list of the available options, pick the one you want and for how much and you're done. Let me know if you have any questions about it, but it's very user-friendly and self-explanatory.

Fidelity is similar. I find buying bonds easier than evaluating and buying equities.

 

[disneysteve]

Fidelity is similar. I find buying bonds easier than evaluating and buying equities.

Totally. There's really nothing to evaluate with T bills. They're all equally safe. It's just a matter of choosing the best rate for the duration you want.

 

[JoeWras]

The thing that helped me most was realizing I could click on the "quick grid" that both Fidelity and Vanguard bring up. It is a good starting point instead of trying to wade through the search parameters with unfamiliar language and terms.

Once I did that a few times and got a feel for the playing field, then I could develop real searches.