reopened treasury auction vs new issue

[mrfeh]

So, I want to buy some 3 month treasuries. The next auction is Monday.

For whatever reason, they can't be purchased on Fidelity at this moment (maybe later today?). Anyway, you can buy a 6 month treasury (auction date Monday) that is reopened from 3 months ago. Given they will mature in 3 months, they are essentially the same thing as a new 3 month bill.

So, what's the difference between the two? Is there any reason to prefer one over the other?

Thanks.

 

[JoeWras]

Don't worry about it for Bills. Doesn't matter.

It's just a documentation trick to reuse an old registration (CUSIP). The auction still determines the price.

For Notes, TIPS and Bonds with coupons, it makes a difference because the baked in coupon doesn't change. However the auction will adjust the price, which could even be a premium. There are also some accounting details regarding accrued interest.

For a 3 month bill piggybacking on an old 6 month? Don't worry about it. You won't see a different offering pop up today. This is the offering for next Monday's auction.

 

[mrfeh]

For a 3 month bill piggybacking on an old 6 month? Don't worry about it. You won't see a different offering pop up today. This is the offering for next Monday's auction.

Unfortunate wording by the Treasury then - their auction schedule says 13 week auction occurring Monday. In my mind, that's not the same thing as reopening a 6 month treasury.

Unnecessarily confusing. Thanks for the clarification.

 

[JoeWras]

Unfortunate wording by the Treasury then - their auction schedule says 13 week auction occurring Monday. In my mind, that's not the same thing as reopening a 6 month treasury.

Unnecessarily confusing. Thanks for the clarification.

This is a good preview should you decide to start working the secondary market. There you can buy all kinds of products with different underlying origins, while simply focusing on the maturity and ultimate yield.

 

[mrfeh]

This is a good preview should you decide to start working the secondary market. There you can buy all kinds of products with different underlying origins, while simply focusing on the maturity and ultimate yield.

Which is why I'm sticking to new issues - when I look at the secondary market, I don't understand all the terms/numbers.

Waiting a few days for the purchase to occur is acceptable.

 

[JoeWras]

Which is why I'm sticking to new issues - when I look at the secondary market, I don't understand all the terms/numbers.

Waiting a few days for the purchase to occur is acceptable.

mrfeh, pretty much me too. Still, the reopen for a T-Bill is simple.

Here's one tip. Keep track of the origin of your purchase so you remember whether you bought a 26 or 13. Looking up the CUSIP won't help. That's about the only impact to you - remembering what duration you bought.

I track my ladder on Quicken and give it a name with the duration baked into the name.

 

[audreyh1]

So, I want to buy some 3 month treasuries. The next auction is Monday.

For whatever reason, they can't be purchased on Fidelity at this moment (maybe later today?). Anyway, you can buy a 6 month treasury (auction date Monday) that is reopened from 3 months ago. Given they will mature in 3 months, they are essentially the same thing as a new 3 month bill.

So, what's the difference between the two? Is there any reason to prefer one over the other?

Thanks.

Unfortunate wording by the Treasury then - their auction schedule says 13 week auction occurring Monday. In my mind, that's not the same thing as reopening a 6 month treasury.

Unnecessarily confusing. Thanks for the clarification.

They are the same thing, they are just reusing the CUSIP as it has the same maturity date. This happens fairly often.

US Treasury has their conventions, and one is they often piggyback on older issues when the maturity dates align, reusing the CUSIP. It’s still a completely new issue.

You should be able to order the 3-month t-bill already at Fidelity. Just go by the maturity date.

 

[audreyh1]

I track my ladder on Quicken and give it a name with the duration baked into the name.

Same here. Duration and maturity date is part of the name. I’m not organizing a ladder but I do kind of ladder (space out) my purchases.

 

[JoeWras]

Same here. Duration and maturity date is part of the name. I’m not organizing a ladder but I do kind of ladder (space out) my purchases.

Great minds think alike. Ha ha.

Here's a screen shot of the early part of my ladder. I also have a few TNOTEs in there later in the ladder. I also make sure to enter the maturity. The quicken investing report has a section for "Maturities of CDs and Bonds" which is nice.

 

[audreyh1]

Ha ha, my “ladders” are generally spaced out 2 or 3 months between maturity dates.

I also only buy T-bills when interest rates are rising quickly because they are the first to respond. Otherwise high yield savings, short-term CDs and money market funds are good enough for me.