Treasury Bills, Notes, and Bonds Discussion

[Dash man]

Two questions about reinvesting my first chunk of 3 month treasuries that are maturing on Dec 29. They are invested thru Schwab in case that would make any difference.

Question 1. Since Dec 29 is a Thursday, will these funds be available to immediately reinvest in the next weekly auction scheduled on Jan 3, or, is there a delay before the funds are available to me?

Question 2. Is it possible, on the same 3 mo. auction date, to invest half the money to automatically rollover at maturity, and the other half to not automatically rollover at maturity?

I am sure I originally intended to do this with separate purchases on the same auction date for 3 month treasuries, $xx,xxx to auto rollover and the same $xx,xxx to not rollover, but it did not work. All came back listed as automatic rollover. Maybe I did something incorrectly.

1. Funds are usually available around noon eastern time on the day of maturity in your account to do with as your please, including trading or withdrawal.
2. It’s my understanding that for a single purchase, the entire amount or none is to be rolled over into the next auction. Perhaps set up two different transactions if you want some done automatically? I’m not sure if it would work for the same CUSIP since I’ve never done it.

 

[audreyh1]

Two questions about reinvesting my first chunk of 3 month treasuries that are maturing on Dec 29. They are invested thru Schwab in case that would make any difference.

Question 1. Since Dec 29 is a Thursday, will these funds be available to immediately reinvest in the next weekly auction scheduled on Jan 3, or, is there a delay before the funds are available to me?

Question 2. Is it possible, on the same 3 mo. auction date, to invest half the money to automatically rollover at maturity, and the other half to not automatically rollover at maturity?

I am sure I originally intended to do this with separate purchases on the same auction date for 3 month treasuries, $xx,xxx to auto rollover and the same $xx,xxx to not rollover, but it did not work. All came back listed as automatic rollover. Maybe I did something incorrectly.

The funds should be available immediately on Dec 29, and you should be able to place an order as soon as the Jan 3 auction is announced - probably later that day. At Fidelity my experience is that funds are available by 8am on a maturing treasury.

I don’t know how to split the rollover if doing two separate orders did not work. That’s how I would do it. I’m guessing you have to call in to fix that and can do so after the fact.

 

[jim584672]

Two questions about reinvesting my first chunk of 3 month treasuries that are maturing on Dec 29. They are invested thru Schwab in case that would make any difference.

Question 1. Since Dec 29 is a Thursday, will these funds be available to immediately reinvest in the next weekly auction scheduled on Jan 3, or, is there a delay before the funds are available to me?

Question 2. Is it possible, on the same 3 mo. auction date, to invest half the money to automatically rollover at maturity, and the other half to not automatically rollover at maturity?

I am sure I originally intended to do this with separate purchases on the same auction date for 3 month treasuries, $xx,xxx to auto rollover and the same $xx,xxx to not rollover, but it did not work. All came back listed as automatic rollover. Maybe I did something incorrectly.

I just had a T-Bill at Schwab maturity date 12/15, funds are close of business so 12/16 is when the funds show as cash in the account.

 

[jldavid47]

I just had a T-Bill at Schwab maturity date 12/15, funds are close of business so 12/16 is when the funds show as cash in the account.

Did you look during the day on the 15th? My maturing bills always show up as cash in my Schwab account by about 1PM Eastern the day of maturity. I often use matured bills as cash for my next purchase. Since the settlement date for the new bills are the same as the maturity date of the old ones, I'm covered even though sometimes my account shows a negative cash balance until the matured bill posts.

 

[jim584672]

Did you look during the day on the 15th? My maturing bills always show up as cash in my Schwab account by about 1PM Eastern the day of maturity. I often use matured bills as cash for my next purchase. Since the settlement date for the new bills are the same as the maturity date of the old ones, I'm covered even though sometimes my account shows a negative cash balance until the matured bill posts.

I did look and cash balance did not reflect the maturity until the next morning. If you have a margin account you can have buying power that will cover it for a day.

 

[Trooper]

I did look and cash balance did not reflect the maturity until the next morning.

That's what I found with Vanguard as well with my T-bills that matured on 12/13/22. I checked before going to sleep and the cash was not there but it was there in the morning (MST).

 

[Chuckanut]

I just had a CD mature for 10K. It's just in time to purchase my 2023 IBond in a few weeks. I can't wait to get that extra 0.4%. Another small victory in the fight to preserve our buying power.

 

[jldavid47]

I did look and cash balance did not reflect the maturity until the next morning. If you have a margin account you can have buying power that will cover it for a day.

I have a margin account and have never been charged even one day margin interest for bill purchases that have settled the same day another bill has matured because the money comes in the day of maturity. I'm not sure why yours doesn't show up like mine. Maybe I'm special.

 

[sengsational]

Wait or Do It?

Nobody has a crystal ball, but there are people that can divine from history what's likely. I'm not one of those people, though.

I'm convinced that while you can't time the equity market, you can time the bond market, at least to some extent. When they started making noises about slowing inflation, it was time to dump the bond fund and get into short fixed assets, and that's where I am now.

I searched "inversion" for the past two weeks, and this thread had the highest number of instances of the word, so that's where this question goes.

Presuming you want to lock-in "good rates" for 5 years+ on your bond allocation, and presuming you'll be buying individual bonds, and obviously this is with money you're not going to need until after the bonds mature or farther out, do you wait for the inversion to correct itself before buying those longer instruments?

 

[Spock]

Nobody has a crystal ball, but there are people that can divine from history what's likely. I'm not one of those people, though.

I'm convinced that while you can't time the equity market, you can time the bond market, at least to some extent. When they started making noises about slowing inflation, it was time to dump the bond fund and get into short fixed assets, and that's where I am now.

I searched "inversion" for the past two weeks, and this thread had the highest number of instances of the word, so that's where this question goes.

Presuming you want to lock-in "good rates" for 5 years+ on your bond allocation, and presuming you'll be buying individual bonds, and obviously this is with money you're not going to need until after the bonds mature or farther out, do you wait for the inversion to correct itself before buying those longer instruments?

There was a article on a source that no one here likes that laid out 3 scenarios for how the curve could "normalize" or "un-invert".
Most people here are waiting for long term yields to rise. But the short term can much easier be put back to 0, and viola, the curve is no longer inverted.

Powell already broke the ice on the idea of a higher inflation target. I'm going ahead and filling the longer term rungs.
1. Soft landing.

In this scenario, the economy slows or enters a very mild and short-lived recession. At the same time, the inflation rate falls rapidly.
Assuming this plays out, which we assign a low probability, we expect the Fed to keep rates at 5% or so until inflation is much closer to 2%. In the soft-landing scenario, the 3-month yield is likely to stick around 5%, and the curve might further invert as longer-term yields fall due to weak economic growth and lower inflation. The curve would steepen when the Fed is comfortable that they have slain inflation and can lower the Fed Funds rate. The steepening would be gradual in this scenario, not “V” shaped like the prior inversions.

2. Something breaks

In this outcome, which we think is most likely, liquidity reductions and sharply deteriorating economic activity cause financial instability. Under such a scenario, something breaks. It may be a market, a significant financial institution, or even a foreign country. Whatever the cause, the Fed would lower rates aggressively to stop a Lehman-like contagion.
Such would likely entail ending QT and possibly starting QE to boost liquidity in the system. Short-term yields would plummet as the Fed lowers rates. Longer-term yields would initially fall as investors seek the safety of U.S. Treasuries.
Lower inflation, weak economic growth, and a flight to quality/safety argue for much lower rates. However, the monetary and fiscal response, if aggressive like in 2020, might stoke inflationary fears. We saw in the three prior inversions that long yields might decline moderately, but short-end yields could plummet to near 0%.

3. Fed forces a steeper curve

An inverted yield curve poses problems for banks as it shrinks their net interest margins (NIM), which makes lending less profitable. To help boost their profitability and fortify their balance sheets, the Fed might want to steepen the curve by forcing long-term yields higher.
... there is about $2.7 to $3 trillion of floating-rate corporate debt outstanding and a similar amount of floating-rate mortgages. As rates reset higher for floating-rate borrowers, bankruptcies will rise. At the same time, banks are seeing increasing losses on corporate loans and debt, their margins are severely contracting. By steepening the yield curve via higher long-term rates, the Fed could improve bank margins which may help banks better weather a credit storm.

 

[Gotadimple]

And your source is? I'd like to share it was a neighbor.

 

[Graybeard]

Placed my weekly order for 25 6 month T bills vs the usual 14 3 month bills.

 

[audreyh1]

I’m interested to see what the auction does today. CNBC app is showing 4.70% on the 6 month (26 week) which is up a bit this morning, and 4.299% on the 3 month (13 week).

These are both lower, however, compared to last week and the week before.

CNBC app shows what the prior issue is trading at on the secondary, or at least the bids from the dealers. The day after each auction they switch to tracking the newest issue. It compares well to the end of day secondary market sample that the Treasury Department publishes.

 

[audreyh1]

Looks like they came in a little lighter than last week, but about the same as a week or two prior.

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
13-Week	No	912796U31	12/22/2022	4.290%	4.397%	$98.915583
26-Week	No	912796ZQ5	12/22/2022	4.550%	4.722%	$97.699722

Well the 13 week is up a smidge compared to last week.

 

[pb4uski]

And your source is? I'd like to share it was a neighbor.

Googled some of the text and found this:
https://www.advisorpedia.com/markets/the-markets-foghorn-is-blowing-but-few-heed-its-warning/

 

[jldavid47]

Looks like they came in a little lighter than last week, but about the same as a week or two prior.

Bills CMB CUSIP Issue Date High Rate Investment Rate Price per $100

13-Week No 912796U31 12/22/2022 4.290% 4.397% $98.915583

26-Week No 912796ZQ5 12/22/2022 4.550% 4.722% $97.699722

The 26 week this week sold at the exact same price (and yield) as the auction on 11/28. I'm sure that's a coincidence but it seems odd. The 13 week was priced just a smidge lower than at that auction.

 

[audreyh1]

The 26 week this week sold at the exact same price (and yield) as the auction on 11/28. I'm sure that's a coincidence but it seems odd. The 13 week was priced just a smidge lower than at that auction.

Same thing happened last week with the 13-week which sold at exactly the same price as the prior week.

 

[Gotadimple]

Googled some of the text and found this:
https://www.advisorpedia.com/markets/the-markets-foghorn-is-blowing-but-few-heed-its-warning/

Thanks!

 

[Graybeard]

Looks like they came in a little lighter than last week, but about the same as a week or two prior.

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
13-Week	No	912796U31	12/22/2022	4.290%	4.397%	$98.915583
26-Week	No	912796ZQ5	12/22/2022	4.550%	4.722%	$97.699722

Well the 13 week is up a smidge compared to last week.

I'm happy with 4.722%, bought 25 and will buy 25 more next week.

 

[JoeWras]

Googled some of the text and found this:
https://www.advisorpedia.com/markets/the-markets-foghorn-is-blowing-but-few-heed-its-warning/

I'll take the author's analysis as true. From this analysis, I thought this was the most interesting point about yield curve un-inverting:

In the three cases (1991, 2003, 2008), the large majority of the curve steepening was due to the short three-month rate plummeting. On average, the ten-year yield fell by 61 basis points, and the 3-month yield fell by 4.62%.

 

[MarieIG]

I have two maturing today. One at TD Ameritrade, and one at Vanguard. Vanguard funds have been showing up the next day - not sure about TDA, but will probably be out this afternoon, so may not be able to check TDA until after the close of the market. We'll see.

 

[jldavid47]

I'm happy with 4.722%, bought 25 and will buy 25 more next week.

Oh, I am as well. I'm buying more 26 week bills next week as well as 52 week. I'm debating the wisdom of getting into the 2-year auction as well, but probably won't.

 

[JoeWras]

Oh, I am as well. I'm buying more 26 week bills next week as well as 52 week. I'm debating the wisdom of getting into the 2-year auction as well, but probably won't.

I'm doing a bit of all three, with a tilt to the 26 week.

 

[MarieIG]

I have two maturing today. One at TD Ameritrade, and one at Vanguard. Vanguard funds have been showing up the next day - not sure about TDA, but will probably be out this afternoon, so may not be able to check TDA until after the close of the market. We'll see.

Checked in to TDA at noon. Money was in account, and I placed an order for a four week. (I'm trying to get a few to have the same maturity date so I can invest a larger chunk end of January.)

 

[Trailwalker]

I'm buying at Thursday's reopening of the 5 year TIPS. I'm betting on inflation hanging around a bit. First TIPS auction for me, and it will be from a deferred tax account.