Treasury Bills, Notes, and Bonds Discussion

[jazz4cash]

If you log onto Schwab and look up at CUSIP for the BoA issue that you purchased, you'll get the page below.

That still seems to be ‘lite’ compared to Fido’s info page. I don’t see any call details.

 

[Montecfo]

I keep looking at those new issue Agency bonds, llke;
FEDERAL FARM CR BKS BOND
5.65000% 01/24/2031

Sure it is callable on the first coupon of July this year, but the coupon is 5.65%, maybe you get lucky and goes longer term, but why would one not buy these and consider it as a 6 month bond? I did buy some a bit ago at 6.5% coupon, but callable in May.

I do not see why these would not be as safe as a t-bill, but with much higher yield. Help me understand why this would not be a short term play?

If you are looking for a ST play and are ok with it becoming LT, yes.

If you have a LT horizon however your risk is that rates are lower post call than they are now (almost certainly) so you miss an opportunity.

 

[pb4uski]

That still seems to be ‘lite’ compared to Fido’s info page. I don’t see any call details.

Call info is further down the page. I didn't include the whole page in the screenshot because I didn't realize someone would be getting anal about it. Call info is also on the link that I provided.

 

[G-Man]

Is it too late to build a 17 week T-bill ladder?

 

[jldavid47]

Is it too late to build a 17 week T-bill ladder?

The short answer is "No." You can start any time. If you really want to use 17 week bills over time, I'd do something similar to what she showed in the video. I'd divvy up my ladder into 4 equal pieces and initially purchase a 4-week, 8-week, 13-week and 17-week the same week. Then as the shorter-term bills mature, roll them into 17-week bills. Then your 17-week bills would mature in 4 weeks, 4 weeks, 5 weeks and 4 weeks. At that point simply buy a new 17-week bill as the oldest one matures.

Personally, I like 26-week bills better, but that's just my preference. There's nothing wrong with going with 17-week bills. Also, I wouldn't try to do Auto-roll even if it's available. The auction schedules are regular and predictable. Just use a calendar reminder.

 

[G-Man]

The short answer is "No." You can start any time. If you really want to use 17 week bills over time, I'd do something similar to what she showed in the video. I'd divvy up my ladder into 4 equal pieces and initially purchase a 4-week, 8-week, 13-week and 17-week the same week. Then as the shorter-term bills mature, roll them into 17-week bills. Then your 17-week bills would mature in 4 weeks, 4 weeks, 5 weeks and 4 weeks. At that point simply buy a new 17-week bill as the oldest one matures.

Personally, I like 26-week bills better, but that's just my preference. There's nothing wrong with going with 17-week bills. Also, I wouldn't try to do Auto-roll even if it's available. The auction schedules are regular and predictable. Just use a calendar reminder.

Just curious about the income stream generated based on a $40K investment in the T-Bill ladder ($10K for each T-Bill)?

 

[jldavid47]

Just curious about the income stream generated based on a $40K investment in the T-Bill ladder ($10K for each T-Bill)?

OK, let's do some (approximate) math.

The 17-week ladder I described above would have 12 maturities during a year. In the latest auction you would have paid $9,847.28 for a $10,000 17-week bill which is a $152.72 discount. Multiplying that by 12 gives you $1,832.64 of gross interest income over the course of a year. Obviously the discount will vary over time so you could get more or less.

Hope that helps.

 

[pb4uski]

Just curious about the income stream generated based on a $40K investment in the T-Bill ladder ($10K for each T-Bill)?

17 week YTM has been between 4.0 to 4.6% recently so probably aroung $1,700/yr.

 

[audreyh1]

Is it too late to build a 17 week T-bill ladder?

Why would it be?

I bought one at auction last week as a bridge to a 26 week ladder and the yield was 4.757% which is just under the 26 week T-bill which has been yielding around 4.85%.

 

[audreyh1]

17 week YTM has been between 4.0 to 4.6% recently so probably aroung $1,700/yr.

Last week at auction it was 4.757% and has been above 4.7% for a while.

 

[pb4uski]

Last week at auction it was 4.757% and has been above 4.7% for a while.

So right you are, I was looking at the wrong column.

 

[G-Man]

Why would it be?

I bought one at auction last week as a bridge to a 26 week ladder and the yield was 4.757% which is just under the 26 week T-bill which has been yielding around 4.85%.

So, could I build this T-Bill ladder (4,8,13,17) in my Fidelity Cash Management account where I currently have ~$40K in the Fidelity Money Market fund (SPRXX)?

 

[audreyh1]

So, could I build this T-Bill ladder (4,8,13,17) in my Fidelity Cash Management account where I currently have ~$40K in the Fidelity Money Market fund (SPRXX)?

If you wish. I believe that account is a full brokerage account.

 

[G-Man]

So, could I build this T-Bill ladder (4,8,13,17) in my Fidelity Cash Management account where I currently have ~$40K in the Fidelity Money Market fund (SPRXX)?

If you wish. I believe that account is actually a full brokerage account.

I assume the T-Bill ladder would generate more income than the $40K currently invested in SPRXX which is yielding ~ 4.15%.

 

[audreyh1]

Yes, the T-bills are generally yielding above 4.5% at the moment, with the 13-week yielding almost 4.70% and 17-week around 4.75%.

You can look at last week’s auction results. https://www.treasurydirect.gov/auctions/upcoming/ Click on the “Auction Results” tab.

 

[G-Man]

Yes, the T-bills are generally yielding above 4.5% at the moment, with the 13-week yielding almost 4.70% and 17-week around 4.75%.

You can look at last week’s auction results. https://www.treasurydirect.gov/auctions/upcoming/ Click on the “Auction Results” tab.

Can the 4,8,13,17 T-Bills be purchased on the Fidelity site?

 

[audreyh1]

Can the 4,8,13,17 T-Bills be purchased on the Fidelity site?

Yes, you have to go to the fixed income page and select New Issues and under that you’ll see Treasuries where it lists the ones announced for auction. 13 week will be auctioned on Monday. The 17 week will be announced on Tuesday and auctioned on Wednesday. The 4 and 8 week will be announced on Tuesday and auctioned on Thursday. Generally once announced a T-bill can be ordered ahead of the auction the afternoon of the announcement. You might want to watch a tutorial that walks you through the process.

Fidelity Fixed Income, you have to log in to see the new issues. https://fixedincome.fidelity.com/ftgw/fi/FILanding

 

[G-Man]

Yes, you have to go to the fixed income page and select New Issues and under that you’ll see Treasuries where it lists the ones announced for auction. 13 week will be auctioned on Monday. The 17 week will be announced on Tuesday and auctioned on Wednesday. The 4 and 8 week will be announced on Tuesday and auctioned on Thursday. Generally once announced a T-bill can be ordered ahead of the auction the afternoon of the announcement. You might want to watch a tutorial that walks you through the process.

Fidelity Fixed Income, you have to log in to see the new issues. https://fixedincome.fidelity.com/ftgw/fi/FILanding

Would you recommend the T-Bill ladder strategy over the Fidelity Money Market fund (SPRXX) in the Fidelity cash management account?

 

[G-Man]

Yes, you have to go to the fixed income page and select New Issues and under that you’ll see Treasuries where it lists the ones announced for auction. 13 week will be auctioned on Monday. The 17 week will be announced on Tuesday and auctioned on Wednesday. The 4 and 8 week will be announced on Tuesday and auctioned on Thursday. Generally once announced a T-bill can be ordered ahead of the auction the afternoon of the announcement. You might want to watch a tutorial that walks you through the process.

Fidelity Fixed Income, you have to log in to see the new issues. https://fixedincome.fidelity.com/ftgw/fi/FILanding

Never purchased T-Bill before. I need to understand how this works.

 

[RetiredAndLovingIt]

Yes, you have to go to the fixed income page and select New Issues and under that you’ll see Treasuries where it lists the ones announced for auction. 13 week will be auctioned on Monday. The 17 week will be announced on Tuesday and auctioned on Wednesday. The 4 and 8 week will be announced on Tuesday and auctioned on Thursday. Generally once announced a T-bill can be ordered ahead of the auction the afternoon of the announcement. You might want to watch a tutorial that walks you through the process.

Fidelity Fixed Income, you have to log in to see the new issues. https://fixedincome.fidelity.com/ftgw/fi/FILanding

Audrey, I logged in and looked at your link, there is 2 bills and it says Trade, shouldn't it say Buy?

 

[audreyh1]

Audrey, I logged in and looked at your link, there is 2 bills and it says Trade, shouldn't it say Buy?

They always say trade.

But the only option they’ll give you is to place an order.

 

[G-Man]

Audrey, I logged in and looked at your link, there is 2 bills and it says Trade, shouldn't it say Buy?

Are these the 8 and 13 week T-Bills that is still for sale from last week?

 

[audreyh1]

Would you recommend the T-Bill ladder strategy over the Fidelity Money Market fund (SPRXX) in the Fidelity cash management account?

It’s a lot more work. Only you can decide if it’s worth it.

Never purchased T-Bill before. I need to understand how this works.

Yes you do. Maybe the first few pages of this thread will help.

That video you posted - she must have other video tutorials that will walk you through the process.

Edited to add: These t-bills are auctioned every week, so there is no rush. You have time to learn about it.

 

[audreyh1]

Are these the 8 and 13 week T-Bills that is still for sale from last week?

No, those are the 13-week and 26-week to be auctioned next Monday (tomorrow).

You don’t find out the exact yield until after the auction, but it usually doesn’t change that much from the prior week.

 

[G-Man]

No, those are the 13-week and 26-week to be auctioned next Monday (tomorrow).

Are these still available to purchase? These are the 2 on the Fidelity site.