Treasury Bills, Notes, and Bonds Discussion 2024+

[audreyh1]

New year, so time for a new thread! The previous one is over 2500 posts.

You can see the upcoming auctions and most recent treasury auction results here: https://www.treasurydirect.gov/auctions/upcoming/

Link back to the prior thread: https://www.early-retirement.org/forums/f28/treasury-bills-notes-and-bonds-discussion-115186.html

That previous thread has a lot of tutorial information in the first several pages so it’s very useful as a reference. Lots of our posters came up the learning curve on buying treasuries since jazz4cash started that thread on 8-31-22.

 

[audreyh1]

Where treasuries ended the year:

Last week's T-bill Auction results:

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
4-Week	No	912797JB4	01/02/2024	5.325%	5.436%	$99.585833
8-Week	No	912797JF5	01/02/2024	5.285%	5.418%	$99.177889
13-Week	No	912797GY7	12/28/2023	5.260%	5.420%	$98.670389
17-Week	No	912797JQ1	01/02/2024	5.210%	5.390%	$98.277806
26-Week	No	912796Y45	12/28/2023	5.080%	5.301%	$97.431778
52-Week	No	912796ZV4	12/28/2023	4.595%	4.841%	$95.353944

Longer durations have been dropping. 13-week had been the pivot for a few weeks now and hasn't dropped for 3 weeks, but looks like 4-week crossed over.


Treasury Notes Auction December Results:

Notes	Reopening	CUSIP	Issue Date	High Yield	Interest Rate	Price per $100
2-Year	No	91282CJS1	01/02/2024	4.314%	4.250%	$99.878444
3-Year	No	91282CJP7	12/15/2023	4.490%	4.375%	$99.680564
5-Year	No	91282CJR3	01/02/2024	3.801%	3.750%	$99.769595
7-Year	No	91282CJQ5	01/02/2024	3.859%	3.750%	$99.336988
10-Year	Yes	91282CJJ1	12/15/2023	4.296%	4.500%	$101.626935

Also TIPS and Bonds traded in the last month. You can go to the Treasury Direct auction results page to see where those are.

 

[audreyh1]

To start off the New Year, the 26-week T-bill dropped below 5.3% at auction this morning: 5.264%. The 13-week T-bill is still hanging in there, 5.404%.

 

[audreyh1]

This weeks T-bill auction results:

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
4-Week	No	912797JC2	01/09/2024	5.290%	5.400%	$99.588556
8-Week	No	912797JG3	01/09/2024	5.285%	5.418%	$99.177889
13-Week	No	912797GZ4	01/04/2024	5.245%	5.404%	$98.674181
17-Week	No	912797JV0	01/09/2024	5.200%	5.379%	$98.281111
26-Week	No	912796Y52	01/04/2024	5.045%	5.264%	$97.435458

Still all above 5%, but 26 week has been steadily dropping.

 

[Koolau]

It's probably my level of ignorance about gummint issues, but I don't feel inclined to buy such instruments. The volatility alone is an issue to me right now. I've become more of a mutual fund kind of investor. So, for gummint bonds, there's a "fund" for that. I do have a small amount in such a Vanguard fund, but that's about the level of my interest at this point. I'm probably missing out, but that's where I stand at this time. As always, YMMV.

 

[Another Reader]

It's probably my level of ignorance about gummint issues, but I don't feel inclined to buy such instruments. The volatility alone is an issue to me right now. I've become more of a mutual fund kind of investor. So, for gummint bonds, there's a "fund" for that. I do have a small amount in such a Vanguard fund, but that's about the level of my interest at this point. I'm probably missing out, but that's where I stand at this time. As always, YMMV.

My father used to go somewhere in San Francisco to attend the auction and buy T bills. Thinking early 60's.

Bills are short term, volatility is relatively low. Just hold until they mature and get your money back with interest.

 

[Trooper]

To start off the New Year, the 26-week T-bill dropped below 5.3% at auction this morning: 5.264%.

Yes my beloved 26-week starts off 2024 with the worst rates of the S-T (less than 1 year) bills. Of course I bought a bunch in that auction. Oh well - Happy 2024!

 

[audreyh1]

Bills are short term, volatility is relatively low. Just hold until they mature and get your money back with interest.

+1

 

[audreyh1]

Yes my beloved 26-week starts off 2024 with the worst rates of the S-T (less than 1 year) bills. Of course I bought a bunch in that auction. Oh well - Happy 2024!

I figure as long as they are above 5% great!

 

[MichaelB]

It would be beneficial to all if we keep this discussion focused on (and limited to) interest rates, auctions, buying and selling Treasuries and related topics.

 

[Sunset]

^^^^^^^ Sorry. I deleted my post.

 

[pb4uski]

I bought my first TIPs today, along with some investment grade corporates.

Between some recent maturities and call proceeds I had a lot of dry powder to deploy to 2027 to 2030 maturities.

 

[grasshopper]

Yes my beloved 26-week starts off 2024 with the worst rates of the S-T (less than 1 year) bills. Of course I bought a bunch in that auction. Oh well - Happy 2024!

Same here had some cash/VMFXX build up in December. Thinking if 26-week paid 5.3% same as VMFXX paid without state tax I would be ahead. Close but no bananas.

 

[JoeWras]

It's probably my level of ignorance about gummint issues, but I don't feel inclined to buy such instruments. The volatility alone is an issue to me right now. I've become more of a mutual fund kind of investor. So, for gummint bonds, there's a "fund" for that. I do have a small amount in such a Vanguard fund, but that's about the level of my interest at this point. I'm probably missing out, but that's where I stand at this time. As always, YMMV.

Sure, you can use mutual funds. But don't ignore direct ownership. It is easy. It really is.

The main difference is you control the redemption process. This is important because with a mutual fund, the NAV fluctuates with the market value of the bonds. You are along for the ride with no control on NAV valuation, so when the time comes to redeem, you may realize losses that you could alternatively wait out on a bond held directly.

 

[pb4uski]

Sure, you can use mutual funds. But don't ignore direct ownership. It is easy. It really is.

The main difference is you control the redemption process. This is important because with a mutual fund, the NAV fluctuates with the market value of the bonds. You are along for the ride with no control on NAV valuation, so when the time comes to redeem, you may realize losses that you could alternatively wait out on a bond held directly.

+1 To me, that is the main advantage of individual bonds in a rolling bond ladder over a mutual fund. If I have an upcoming need for cash, I can simply not reinvest some maturity proceeds or sell a bond near to maturity for close to its par value. If I'm in a bond fund and I need cash, then when I sell at NAV I am effectively selling a little piece of every bond in the fund's portfolio, some of which may be underwater due to change in interest rates.

 

[jldavid47]

I figure as long as they are above 5% great!

+1

I was telling a friend of mine the same thing last week. Face it. We got spoiled. Let's put things into perspective. 1 year ago the 26 week auction yielded 4.812% and we were thrilled to get it. The auction this week yielded 5.264% and everyone gets depressed. Chill, people. Things are still good, just not as good as a few months ago.

 

[pb4uski]

Yeah, its becoming harder to find 4-7 year paper yielding more than 5%, which is sort of my target but I may have to rethink that and shave it down to 4.5%.

I did buy a couple BBB+ rated corporate bonds maturing in 2027 in the 5.5% range yesterday.

 

[Chuckanut]

Yes my beloved 26-week starts off 2024 with the worst rates of the S-T (less than 1 year) bills. Of course I bought a bunch in that auction. Oh well - Happy 2024!

I just had my first replacement for a CD spot on my ladder that yields less than the CD that recently matured..

For now, I am sticking to CDs and Treasuries, all guaranteed by Uncle Sam. I have enough risk in the common stock part of my investments. No need to add more risk by purchasing corporate bonds.

 

[jazz4cash]

+1 To me, that is the main advantage of individual bonds in a rolling bond ladder over a mutual fund. If I have an upcoming need for cash, I can simply not reinvest some maturity proceeds or sell a bond near to maturity for close to its par value. If I'm in a bond fund and I need cash, then when I sell at NAV I am effectively selling a little piece of every bond in the fund's portfolio, some of which may be underwater due to change in interest rates.

Exactly! Volatility favors individual issues vs. funds. Funds offer ease of purchase and diversification. I am sticking with individual issues for now.

 

[jazz4cash]

+1

I was telling a friend of mine the same thing last week. Face it. We got spoiled. Let's put things into perspective. 1 year ago the 26 week auction yielded 4.812% and we were thrilled to get it. The auction this week yielded 5.264% and everyone gets depressed. Chill, people. Things are still good, just not as good as a few months ago.

I know! How did we get spoiled so easily! Actually, I am still savoring these rates since I am comparing them to a year or more ago….not a month ago. I am committed to a lumpy ladder and taking whatever the market gives.

 

[audreyh1]

Exactly! Volatility favors individual issues vs. funds. Funds offer ease of purchase and diversification. I am sticking with individual issues for now.

I hold mutual funds for maturity range 2 years or longer. I only regularly purchase treasuries 1 year or shorter and CDs 18 months or shorter when they have higher rates than MM funds and/or high yield savings accounts.

I made an exception last October and the prior December and purchased 5yr TIPS because they were at historic real rates and coupons. That’s it for TIPS for me though.

I don’t care about bond fund volatility. Volatility gives me rebalancing opportunities. They are also highly liquid.

 

[GATime]

30 year

Just saw on Vanguard that the 30 year bond is at ~4.2% with a close on 1/11. Has me thinking that perhaps this may an option for a small portion, like 3ish%. Would treat this kinda of like an annuity. Am I thinking about this right or wrong.

 

[Surewhitey]

30 yrs is too long for us. We'd be locking up $$ until 83&89. I'm not planning to make it there. I suppose it could be a very long ladder position... 4.2% is just not enough for us to do it.

$500k would get you just over $20k income annually... If $500k is 3%ish, maybe. Also the state tax consideration, if you are in a state to consider.

 

[finvest2]

Just saw on Vanguard that the 30 year bond is at ~4.2% with a close on 1/11. Has me thinking that perhaps this may an option for a small portion, like 3ish%. Would treat this kinda of like an annuity. Am I thinking about this right or wrong.

I'd feel a lot better owning TIPS for a 30 year duration. It's better to not have to guess at inflation over such a long period, I think.

30 year TIPS are paying ~2% above whatever CPI is currently.

 

[Chuckanut]

I'd feel a lot better owning TIPS for a 30 year duration. It's better to not have to guess at inflation over such a long period, I think.

30 year TIPS are paying ~2% above whatever CPI is currently.

While 30 years is to long for me, I agree with the above sentiment. I figure once we get past 7 years, the stock market long-term returns will be the best inflation fighter I have. But, true to the principle of diversification, and keeping in mind that I am too old to start over, I have started adding TIPS and Ibonds to bond ladder steps out past 5 years.