Treasury Bills, Notes, and Bonds Discussion 2024+

[Koolau]

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.

If those same bonds would guarantee me 30 more years of life, I'd be all over them - even at 0%. Heh, heh, in 30, I'll be 106!!

 

[jldavid47]

30 yrs is too long for us. We'd be locking up $$ until 83&89. I'm not planning to make it there.

Treasury bonds are liquid. You aren't really "locking up" for 30 years. You can sell them at any time at the prevailing market price.

 

[jim584672]

Today's auction

4 week - 5.390%
8 week - 5.407%

 

[audreyh1]

This weeks T-bill auction results:

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
4-Week	No	912797JD0	01/16/2024	5.280%	5.390%	$99.589333
8-Week	No	912797JH1	01/16/2024	5.275%	5.407%	$99.179444
13-Week	No	912797HF7	01/11/2024	5.235%	5.394%	$98.676708
17-Week	No	912797JW8	01/16/2024	5.180%	5.358%	$98.287722
26-Week	No	912797GB7	01/11/2024	5.030%	5.247%	$97.457056

 

[jldavid47]

I put some cash to work in the 8 and 17-week auctions this week. Results weren't bad.

 

[Montecfo]

Just looking at the 2 year Treasury which is viewed by many as a predictor of Fed action. It is hanging about 100+ basis points below the Fed funds rate.

 

[audreyh1]

I put some cash to work in the 8 and 17-week auctions this week. Results weren't bad.

Most are hanging around 5.4%, not bad at all.

 

[aja8888]

Most are hanging around 5.4%, not bad at all.

I'll take over 5% all day long!

 

[audreyh1]

I'll take over 5% all day long!

Same here!

 

[G-Man]

Me too. How long will it last? I'm currently in Money Market fund (FZDXX) to get 5% or above.

 

[Chuckanut]

I'll take over 5% all day long!

With inflation in the mid 3% area we still need rates in the high 4% area or more to break even in real terms after taxes. I am thankful we still have the 5%+ rates.

 

[PaunchyPirate]

I'm sticking with the purchase of 6-month bills to get a balance between rate and duration.

 

[Montecfo]

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.

It does not pay out the way an annuity does. You get your money back at the end.

30 year is mostly for pension funds and sovereigns. Most regular investors do not take on that long term.

Are you thinking this will look like a really good rate in a few years?

 

[audreyh1]

I'm sticking with the purchase of 6-month bills to get a balance between rate and duration.

Same here.

 

[G-Man]

Same here.

Why 26-week T-bills as opposed to 4-week T-bills? In addition, does T-bills have an advantage over money market funds such as Fidelity FZDXX? I like the liquidity of money market funds.

 

[hpnutty]

April seems to be the top (highest return) of the 3rd party treasuries I've been following @ Fidelity. I guess that the "market's view" when the Fed will drop fund rates?

 

[audreyh1]

Why 26-week T-bills as opposed to 4-week T-bills? In addition, does T-bills have an advantage over money market funds such as Fidelity FZDXX? I like the liquidity of money market funds.

The way I see it, I’m going for the longer duration right now assuming that rates will be lower a few months from now (locking in). The 4 week may have a slightly higher rate now, but in 4 or 8 or 12 weeks it might not.

Money market fund rates will also likely drop. So with T-bills you can keep the higher rates longer.

I have MM funds like FZDXX as well as 26-week T-bills plus some longer CDs. I maintain a range of liquidity.

 

[G-Man]

The way I see it, I’m going for the longer duration right now assuming that rates will be lower a few months from now. The 4 week may have a slightly higher rate now, but in 4 or 8 weeks it might not.

Money market fund rates will also likely drop. So with T-bills you can keep the higher rates longer. I maintain a range of liquidity.

I have MM funds like FZDXX as well as 26-week T-bills plus some longer CDs.

So, if you had a $120K how would you allocate between T-bills and money market fund?

 

[audreyh1]

So, if you had a $120K how would you allocate between T-bills and money market fund?

This completely depends on each investor. When might you need some of the money? What are your goals?

 

[G-Man]

This completely depends on each investor. When might you need some of the money? What are your goals?

Building up taxable account for official retirement in April 2025. Would not need to use the funds until April 2025.

 

[BGold]

Investing in individual bonds has been a bit of a learning curve for me this year. I began investing in short term t-bills since the rates went up over 5%, but with the FED beginning to signal rate cuts, I’ve gone a bit longer in duration this week. Purchased 10-yr TIPS at 1.7X% in DW and my IRAs, and a 3 yr 5.75% callable Agency Bond in my IRA. Also a 3y Treasury note at 4% in our taxable account.

 

[audreyh1]

Building up taxable account for official retirement in April 2025. Would not need to use the funds until April 2025.

If you really don’t think you need the funds for a year then I would tend to go longer and buy the 12 to 15 month CDs offered at 5.25% to 5.5% directly by online banks such as Ally or Synchrony. I have some of those too.

The 52 week T-bill is already under 5%.

Brokered CDs with call protection have also dropped below 5%.

 

[G-Man]

If you really don’t think you need the funds for a year then I would tend to go longer and buy the 12 to 15 month CDs offered at 5.25% to 5.5% directly by online banks such as Ally or Synchrony. I have some of those too.

The 52 week T-bill is already under 5%.

Brokered CDs with no call have also dropped below 5%.

What is the tax treatment on the interest/dividend from the CDs?

 

[audreyh1]

What is the tax treatment on the interest/dividend from the CDs?

It’s ordinary income like savings accounts, MM funds and T-bills except that T-bill interest is state tax free.

 

[G-Man]

It’s ordinary interest like savings accounts, MM funds and T-bills except that T-bill interest is state tax free.

Thanks