Treasury Bills, Notes, and Bonds Discussion

[joesxm3]

Now that rates seem to be topping out, at least for now, I have stopped buying weekly 13 week To bills and only buy 26 week. I have also put a month of expenses into 52 week for the past two months.

Should I be increasing my 52 week amounts to try to lock in some yield? Or maybe even dipping my toe into two year notes?

I know that notes pay a coupon. If I plan to hold to maturity does that affect me? Will the brokerage just add the coupon into my taxable income so tax time is easy?

 

[audreyh1]

Yes, any interest from Treasuries will show up on the brokerage tax forms as interest, including the last bit when your zero coupon T-bill matures.

Who knows on the other stuff. That is usually driven by your investment plan. If you don’t have a long term investment plan it’s time to make one.

 

[MarieIG]

Well, I put in an order for a 17 week in our house account, which I need to keep short term.

I am looking at starting one years, in another taxable account to push that interest over to 2024, and leave a little additional room for Roth conversions.

 

[copyright1997reloaded]

Thursday 10-year TIPS new offering

Finally a new TIPS offering (vs. reopening), CUSIP 91282CGK1, 10 years, issue 1/31/23, maturity January 15, 2033.

Given the current (as of today) Tips real yield (1.37%), the coupon would likely be 1.25% and it would sell at a slight discount to par (how much is a math exercises I am too lazy to do as there is a bit of accrued interest starting from 1/15/23.)

Who's in on this? I have a smallish order in a ROTH account, but could potentially do a much higher $ order in a tIRA. Not sure I want to go heavy on this, just getting opinions here.

I think "in the ROTH" is the best place for these (vs. taxes on accrued inflation component), but my ROTH $ capabilities are very limited currently compared to tIRA or even non-tax-advantaged accounts...so it is sorta precious in terms of what I can put there.

Thoughts?

ETA: The expected real return component on these is the driver for me. If this was like the heyday when I purchased TIPs in the secondary in 2008/09 @ 3.5 and higher real, I would go in as much as possible. If 0-1% real, why bother. Dunno how much 1.25-1.5% pushes me on this.

 

[Graybeard]

With the Vanguard Settlement Fund at 4.26% today (up 5 bp over the past week or so) and the 4 week T bill indicative yield at 4.437%, I going to put most of my taxable account's Settlement Fund in the 4 week bill tomorrow.

 

[audreyh1]

With the Vanguard Settlement Fund at 4.26% today (up 5 bp over the past week or so) and the 4 week T bill indicative yield at 4.437%, I going to put most of my taxable account's Settlement Fund in the 4 week bill tomorrow.

Last week auction was 4.446%. I think you have a pretty good chance of beating that as it looks like it was trading after market at 4.488% tonight.

Also the Treasury reported 4.48% for their “secondary market sample” for today. https://home.treasury.gov/resource-..._bill_rates&field_tdr_date_value_month=202301

The 4 week really moved up sharply YTD.

 

[JoeWras]

Well, I put in an order for a 17 week in our house account, which I need to keep short term.

Are you sure? Something funky is going on. Treasury had 17 week on the schedule, but I'm seeing a new CMB of 44 days (a funky 6 1/4 week bill).

Here's the announcement. https://treasurydirect.gov/instit/annceresult/press/preanre/2023/A_20230117_3.pdf

Not sure I recall this term before.

 

[JoeWras]

Finally a new TIPS offering (vs. reopening), CUSIP 91282CGK1, 10 years, issue 1/31/23, maturity January 15, 2033.

Given the current (as of today) Tips real yield (1.37%), the coupon would likely be 1.25% and it would sell at a slight discount to par (how much is a math exercises I am too lazy to do as there is a bit of accrued interest starting from 1/15/23.)

Who's in on this?

I am, but not a lot.

 

[Montecfo]

Last week auction was 4.446%. I think you have a pretty good chance of beating that as it looks like it was trading after market at 4.488% tonight.

Also the Treasury reported 4.48% for their “secondary market sample” for today. https://home.treasury.gov/resource-..._bill_rates&field_tdr_date_value_month=202301

The 4 week really moved up sharply YTD.

Yes. And the longer term yields moved down sharply.

 

[MarieIG]

Are you sure? Something funky is going on. Treasury had 17 week on the schedule, but I'm seeing a new CMB of 44 days (a funky 6 1/4 week bill).

Here's the announcement. https://treasurydirect.gov/instit/annceresult/press/preanre/2023/A_20230117_3.pdf

Not sure I recall this term before.

Yeh, I got it through Vanguard. The order showed as accepted. IIRC, the settlement date is 1/24. I'm paying for it with a bill that's maturing 1/19 (which means the funds meander into my settlement fund on 1/20).

 

[JoeWras]

Yeh, I got it through Vanguard. The order showed as accepted. IIRC, the settlement date is 1/24. I'm paying for it with a bill that's maturing 1/19 (which means the funds meander into my settlement fund on 1/20).

Ah yes, I blinked and was too late. I forgot about the speed of the 17 week from announcement to close.

Is this 6 1/4 week Bill new? It isn't showing on Vanguard but is on Fidelity.

Not that I want a 44 day product, I just find it interesting. The whole point of CMBs is supposed to provide snap auctions to fill holes in the government's needs. Apparently, there is a need.

 

[audreyh1]

Ah yes, I blinked and was too late. I forgot about the speed of the 17 week from announcement to close.

Is this 6 1/4 week Bill new? It isn't showing on Vanguard but is on Fidelity.

Not that I want a 44 day product, I just find it interesting. The whole point of CMBs is supposed to provide snap auctions to fill holes in the government's needs. Apparently, there is a need.

Yes, I saw that announcement was posted yesterday for auction today.

 

[copyright1997reloaded]

I am, but not a lot.

TIPS 10-year real yield (on existing) has moved down, currently at 1.251%. So not as good as I indicated (1.37%) a couple days ago. I will need to decide on this tonight...might pull my order or reduce it.

 

[Fermion]

TIPS 10-year real yield (on existing) has moved down, currently at 1.251%. So not as good as I indicated (1.37%) a couple days ago. I will need to decide on this tonight...might pull my order or reduce it.

It should move back up with this market drop today shouldn't it?

 

[audreyh1]

I see the 17 week auction went for 4.746% today. That’s down a bit from last week when it was 4.82%.

 

[copyright1997reloaded]

It should move back up with this market drop today shouldn't it?

Not necessarily. It isn't equity, it is debt...and yields were down (prices up) pretty much across the board today.

 

[audreyh1]

And we have this week’s T-bill auction results:

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
4-Week	No	912796Y60	01/24/2023	4.480%	4.558%	$99.651556
8-Week	No	912796Z77	01/24/2023	4.520%	4.615%	$99.296889
13-Week	No	912796V48	01/19/2023	4.560%	4.677%	$98.847333
17-Week	No	912797FF9	01/24/2023	4.610%	4.746%	$98.476139
26-Week	No	912796ZZ5	01/19/2023	4.685%	4.865%	$97.631472

Looks like the shortest durations keep moving up sharply. Graybeard got 4.558% on his 4 week.

Last week’s auction results. https://www.early-retirement.org/fo...d-bonds-discussion-115186-61.html#post2880677

 

[MdaPetralia]

And we have this week’s T-bill auction results:

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
4-Week	No	912796Y60	01/24/2023	4.480%	4.558%	$99.651556
8-Week	No	912796Z77	01/24/2023	4.520%	4.615%	$99.296889
13-Week	No	912796V48	01/19/2023	4.560%	4.677%	$98.847333
17-Week	No	912797FF9	01/24/2023	4.610%	4.746%	$98.476139
26-Week	No	912796ZZ5	01/19/2023	4.685%	4.865%	$97.631472

Looks like the shortest durations keep moving up sharply. Graybeard got 4.558% on his 4 week.

Last week’s auction results. https://www.early-retirement.org/fo...d-bonds-discussion-115186-61.html#post2880677

I thought I saw the 52-week T-Bill action date also start today (1/19)? Why is this not listed? I also don't see it listed on Vanguard's auction site.

 

[JoeWras]

I thought I saw the 52-week T-Bill action date also start today (1/19)? Why is this not listed? I also don't see it listed on Vanguard's auction site.

Patience. It shows up in the afternoon sometime.

EDIT: it is up on Fidelity now (1PM EST)

 

[BeWealthy]

52 week auction is on 1/24.


https://www.treasurydirect.gov/auctions/upcoming/

 

[audreyh1]

I thought I saw the 52-week T-Bill action date also start today (1/19)? Why is this not listed? I also don't see it listed on Vanguard's auction site.

Because it will be auctioned next week. It is to be announced today.

It will be included in the auction results next week.

 

[joesxm3]

I was looking at the Treasury web page auction results and saw that for the 10, 20 and 30 year the price per $100 was like $104 or $107, with the interest rate 4%.

What is the deal with that? If I pay $104 for $100 of the 20 year bond am I losing the first year of interest?

 

[Sunset]

I was looking at the Treasury web page auction results and saw that for the 10, 20 and 30 year the price per $100 was like $104 or $107, with the interest rate 4%.

What is the deal with that? If I pay $104 for $100 of the 20 year bond am I losing the first year of interest?

I'm also interested in knowing, my guess is:
You will lose 20 cents of interest per year per $100 if you hold it to maturity effectively.
In reality you will get extra interest and the extra you paid reduces the interest to what it will actually be which is lower than the $100 par value the bond pays .
Let's see if I'm right.

 

[JoeWras]

Maybe Freedom 56 can explain. This issue is always confusing.


What I believe happens with these auctions is that it is a reissue, so the coupon is known, having been established at original issue.

Since then, the market has spoken and a rate of 4% is too high. So, the bond auctions at premium.

Essentially, market price drains into the auction.

I could be full of rocks though.

 

[Graybeard]

I've been waiting for the 52 week T bill and today is the day yet at Vanguard it is not even listed. This was just a few minutes ago. Anyone know why?