Treasury Bills, Notes, and Bonds Discussion

[tulak]

I’m waiting for the January auction. I hope that rates hold until then!

 

[Montecfo]

Rates continuing to drop. Auctions no longer an issue as market eating the supply and still dropping.

20 year auction was "strong".

 

[jldavid47]

The month-long downward trend in short-term Treasury yields (temporarily?) stopped this week. The 13-week came in 0.015% higher than last week at 5.441% while the 26-week came in 0.011% higher at 5.472%.

 

[JoeWras]

But the 2-yr and 5-yr notes drooped from the previous auctions.

 

[jldavid47]

But the 2-yr and 5-yr notes drooped from the previous auctions.

Well, given that those auctions happen only once a month that was to be expected, wasn't it?

 

[Montecfo]

I see the 10 year being quoted at 4.288% this am.

That was a quick trip up to 5% and back.

 

[Fermion]

I see the 10 year being quoted at 4.288% this am.

That was a quick trip up to 5% and back.

Aren't the 10 year TIPS paying 2. something% plus inflation, which would give them a higher return down to 2% inflation which is the unmet target?

 

[tulak]

Aren't the 10 year TIPS paying 2. something% plus inflation, which would give them a higher return down to 2% inflation which is the unmet target?

Yep, ~2.1% for 10 year TIPS. Still a good deal.

https://www.wsj.com/market-data/bonds/tips

 

[copyright1997reloaded]

Aren't the 10 year TIPS paying 2. something% plus inflation, which would give them a higher return down to 2% inflation which is the unmet target?

2.064% as of now for 10-year, 2.083% on 5-year. 5-year is now selling above par, has 2.37500% coupon.

 

[calmloki]

Am i jumping the gun? Was going to order a 26 week T-bill with some money burning a hole in my pocket but Fidelity isn't selling it (yet?). Treasury Direct doesn't show it as an upcoming auction. and now, at 8:30 Pacific, only the 42 day is listed under CMB.

 

[audreyh1]

Am i jumping the gun? Was going to order a 26 week T-bill with some money burning a hole in my pocket but Fidelity isn't selling it (yet?). Treasury Direct doesn't show it as an upcoming auction. and now, at 8:30 Pacific, only the 42 day is listed under CMB.

Yes, you are jumping the gun.

The Treasury announcement will occur late this morning, maybe already has at this moment*, and it should then be listed under new issues by early this afternoon at Fidelity.

It’s good to become familiar with auction announcement timing.

* Yes the 26 week auction for 12/4 is now announced at Treasury. It’s usually up by 1pm ET or so at Fidelity then you can place your order.
https://www.treasurydirect.gov/auctions/upcoming/

 

[Dash man]

Am i jumping the gun? Was going to order a 26 week T-bill with some money burning a hole in my pocket but Fidelity isn't selling it (yet?). Treasury Direct doesn't show it as an upcoming auction. and now, at 8:30 Pacific, only the 42 day is listed under CMB.

It was just posted at Schwab.

 

[audreyh1]

This week’s T-Bill auction results:

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
4-Week	No	912797HX8	12/05/2023	5.290%	5.400%	$99.588556
8-Week	No	912797JB4	12/05/2023	5.280%	5.412%	$99.178667
13-Week	No	912797GP6	11/30/2023	5.280%	5.441%	$98.665333
17-Week	No	912797JL2	12/05/2023	5.240%	5.421%	$98.267889
26-Week	No	912797HS9	11/30/2023	5.240%	5.472%	$97.350889
52-Week	No	912797HP5	11/30/2023	4.935%	5.214%	$94.996458

November’s Treasury Note auction results:

Notes	Reopening	CUSIP	Issue Date	High Yield	Interest Rate	Price per $100
2-Year	No	91282CJL6	11/30/2023	4.887%	4.875%	$99.977397
3-Year	No	91282CJK8	11/15/2023	4.701%	4.625%	$99.789641
5-Year	No	91282CJN2	11/30/2023	4.420%	4.375%	$99.800095
7-Year	No	91282CJM4	11/30/2023	4.399%	4.375%	$99.856744
10-Year	No	91282CJJ1	11/15/2023	4.519%	4.500%	$99.848482

 

[audreyh1]

This week’s T-bill auction results:

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
4-Week	No	912797HY6	12/12/2023	5.285%	5.395%	$99.588944
8-Week	No	912797JC2	12/12/2023	5.275%	5.407%	$99.179444
13-Week	No	912797GQ4	12/07/2023	5.250%	5.409%	$98.672917
17-Week	No	912797JM0	12/12/2023	5.240%	5.421%	$98.267889
26-Week	No	912797HT7	12/07/2023	5.190%	5.419%	$97.376167

T-bill rates have been slowly drifting down. I would expect next Monday’s 26-week to be under 5.4%.

 

[JoeWras]

5.4?

 

[audreyh1]

5.4?

Fixed it, thanks!

 

[audreyh1]

Well it might just manage the 5.4 handle today. We’ll see soon.

ETA: came in at 5.419% same as last week.

Interesting. It had been trading under 5.4% on the secondary most of last week.

 

[audreyh1]

This week’s T-bill auction results:

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
4-Week	No	912797HZ3	12/19/2023	5.270%	5.380%	$99.590111
8-Week	No	912797JD0	12/19/2023	5.275%	5.407%	$99.179444
13-Week	No	912797GX9	12/14/2023	5.260%	5.420%	$98.670389
17-Week	No	912797JN8	12/19/2023	5.250%	5.432%	$98.264583
26-Week	No	912797FS1	12/14/2023	5.190%	5.419%	$97.376167

26 week managed to stay above 5.4% this past Monday, but has dropped closer to 5.3% since.

 

[Midpack]

I've been buying and rolling 26 week T-bills for more than a year and half, but it looks like it's time to lock in longer durations. All our T-bills are maturing in Jan (30%) & Apr (70%), looks like rates have peaked, guess I'll buy longer durations then. What am I missing?

 

[Happyras]

I've been buying and rolling 26 week T-bills for more than a year and half, but it looks like it's time to lock in longer durations. All our T-bills are maturing in Jan (30%) & Apr (70%), looks like rates have peaked, guess I'll buy longer durations then. What am I missing?

The way I to have view this (being in the same boat) is that the higher yield for shorter duration now is off-setting any advantage of the longer 9 month to 5 year returns. You have to consider the inversion of the yield curve will soon correct as we enter a possible economic downturn. I have confidence we will see higher long term rates eventually that pay a risk premium for duration over inflation. The short term rates will drop more when the cuts by the FED really occur. But when? At that time maybe the 5 and 10 year notes will be 3.5%, but that's not so far off from where they are today. We can still get 5.4% for 3 to 6 months, while you are below 4% now for long terms.

Wish I knew better, but I go with what I can until I know better.

 

[Midpack]

The way I to have view this (being in the same boat) is that the higher yield for shorter duration now is off-setting any advantage of the longer 9 month to 5 year returns. You have to consider the inversion of the yield curve will soon correct as we enter a possible economic downturn. I have confidence we will see higher long term rates eventually that pay a risk premium for duration over inflation. The short term rates will drop more when the cuts by the FED really occur. But when? At that time maybe the 5 and 10 year notes will be 3.5%, but that's not so far off from where they are today. We can still get 5.4% for 3 to 6 months, while you are below 4% now for long terms.

Wish I knew better, but I go with what I can until I know better.

Well said. Timing it just right won’t be possible so I’ll probably buy more 52wk and some 26wk this time around. And go longer when the curve reverts to (more) normal. Thanks.

 

[jim584672]

42 day T-Bill 5.391% today.

https://www.treasurydirect.gov/instit/annceresult/press/preanre/2023/R_20231219_1.pdf

 

[audreyh1]

The 26-week also dropped below 5.4% yesterday. 5.364%.

 

[Midpack]

If short term rates have peaked, at least the worst is over for bond funds - not that I’m anxious to put money there yet.

 

[Montecfo]

If short term rates have peaked, at least the worst is over for bond funds - not that I’m anxious to put money there yet.

The problem was duration, not bond funds per se. If you owned individual bonds of the same duration heading into a 500 basis point rate hike, you would have had similar paper losses.

Bond funds are useful tools but not for every purpose. Same with individual bonds.