Treasury Bills, Notes, and Bonds Discussion

[Dash man]

Good day to all.


I have a question on muni bonds.


Using this site for the data: https://personal.vanguard.com/us/FixedIncomeHome
there are a number of listed choices for investment.



Currently the 1 year Tbill is offered at 4.72%.


Moving down the list of available choices I see "Municipals highest grade" 1 year offered at 2.35%.


I don't get it.

Why buy any of the muni bonds, their quality rating can't be any higher than a Tbill.


Thanks for any input on this....

You pretty much said it all.

 

[MarieIG]

Good day to all.


I have a question on muni bonds.


Using this site for the data: https://personal.vanguard.com/us/FixedIncomeHome
there are a number of listed choices for investment.



Currently the 1 year Tbill is offered at 4.72%.


Moving down the list of available choices I see "Municipals highest grade" 1 year offered at 2.35%.


I don't get it.

Why buy any of the muni bonds, their quality rating can't be any higher than a Tbill.



Thanks for any input on this....

I don't see munis as a pure safety play. Rather, they may potentially have some attraction for those seeking relief from state and federal taxes.

Certainly, I would not consider that muni in an IRA, when I can easily buy a T bill.

 

[Bruno]

So whats the difference in High Rate and Investment rate? Thanks Bruno

 

[pb4uski]

Good day to all.


I have a question on muni bonds.


Using this site for the data: https://personal.vanguard.com/us/FixedIncomeHome
there are a number of listed choices for investment.



Currently the 1 year Tbill is offered at 4.72%.


Moving down the list of available choices I see "Municipals highest grade" 1 year offered at 2.35%.


I don't get it.

Why buy any of the muni bonds, their quality rating can't be any higher than a Tbill.


Thanks for any input on this....

But if your marginal tax rate was 52% then AAA munis might make sense.

4.72% * (1-52%) = 2.27% and 2.35%>2.27%

So much for efficient markets!

 

[Bruno]

So whats the difference in High Rate and Investment rate? Thanks Bruno

starts at 3:35 Thank You youtube..

 

[JoeWras]

So whats the difference in High Rate and Investment rate? Thanks Bruno

I don't like videos. I'll give you my take. "High Rate" is something to worry about if you involved in the auction, an institutional trader looking for a play in the auction.

Investment rate is what I, as a mere peon, need to worry about. EOL.

 

[audreyh1]

I don't like videos. I'll give you my take. "High Rate" is something to worry about if you involved in the auction, an institutional trader looking for a play in the auction.

Investment rate is what I, as a mere peon, need to worry about. EOL.

+1

 

[jldavid47]

But if your marginal tax rate was 52% then AAA munis might make sense.

4.72% * (1-52%) = 2.27% and 2.35%>2.27%

So much for efficient markets!

Except there is no 52% marginal rate and many states tax muni interest from jurisdictions outside of their state.

 

[pb4uski]

Except there is no 52% marginal rate and many states tax muni interest from jurisdictions outside of their state.

I guess that some people just can't take a joke [emoji23]

 

[MarieIG]

Well, I was able to put in orders this morning at Vanguard, but when I went over to TD - nothing came up for sale.

 

[Spanky]

How about Vanguard Treasury Money Market Fund (VUSXX) albeit the yield is slightly lower than that of T-bills? It provide higher liquidly.

 

[audreyh1]

General question?

Sure, you should always pay attention to your liquidity and cash flow needs and structure durations accordingly.

The money market funds will also track up with the shortest duration treasuries as rates rise.

 

[MarieIG]

Well, I was able to put in orders this morning at Vanguard, but when I went over to TD - nothing came up for sale.

Well, the bonds showed up this morning - I put in an order before the market opened. I also "sold" money market funds - which should appear in the sweep account tonight, which is pre-settlement date so I hope the order goes through.

 

[Spanky]

Well, the bonds showed up this morning - I put in an order before the market opened. I also "sold" money market funds - which should appear in the sweep account tonight, which is pre-settlement date so I hope the order goes through.

What's yield on your bonds?

 

[mrfeh]

General question?

Sure, you should always pay attention to your liquidity and cash flow needs and structure durations accordingly.

The money market funds will also track up with the shortest duration treasuries as rates rise.

And down, as rates fall.

 

[audreyh1]

And down, as rates fall.

Of course, that’s when people rush out to lock in longer durations.

 

[audreyh1]

Auction results today. Wow, big rise in 26 week today. So close to 5%!

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
13-Week	No	912796ZE2	02/09/2023	4.590%	4.708%	$98.839750
26-Week	No	912796XY0	02/09/2023	4.755%	4.940%	$97.596083

 

[MarieIG]

What's yield on your bonds?

^^^^^ I just bought two 13 weeks; and one 26 week. Audrey just posted the auction results. She knew first!

 

[copyright1997reloaded]

Auction results today. Wow, big rise in 26 week today. So close to 5%!

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
13-Week	No	912796ZE2	02/09/2023	4.590%	4.708%	$98.839750
26-Week	No	912796XY0	02/09/2023	4.755%	4.940%	$97.596083

I increased my order size this morning (about 9:20AM) when I saw the 6-month yield (secondary) up this morning. This was a nice result (at least in terms of localized higher yield )

 

[audreyh1]

^^^^^ I just bought two 13 weeks; and one 26 week. Audrey just posted the auction results. She knew first!

Ha ha, I just know to check by around noon eastern time. Really shortly after 11:30 am ET the results are posted.

 

[Spanky]

Auction results today. Wow, big rise in 26 week today. So close to 5%!

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
13-Week	No	912796ZE2	02/09/2023	4.590%	4.708%	$98.839750
26-Week	No	912796XY0	02/09/2023	4.755%	4.940%	$97.596083

That's a great deal!

 

[Graybeard]

2 weeks ago I bought 75 26 week T bills IIRC about 4.8% and today bought another 75 and now 4.9%! I wonder what the 52 week rate will be in 2 more weeks?

 

[Sunset]

2 weeks ago I bought 75 26 week T bills IIRC about 4.8% and today bought another 75 and now 4.9%! I wonder what the 52 week rate will be in 2 more weeks?

Are you meaning you bought $75K worth and then another $75K worth ?

Or you actually did 75 transactions two times ?

 

[Graybeard]

Are you meaning you bought $75K worth and then another $75K worth ?

Or you actually did 75 transactions two times ?

Bought $75,000 (75 T bills) each time, 1 purchase 2 weeks ago and 1 purchase last weekend.

 

[Sunset]

Bought $75,000 (75 T bills) each time, 1 purchase 2 weeks ago and 1 purchase last weekend.

Interesting, I just think of it as buying one $75K T bill, probably because it shows as 1 line on my brokerage.
Can't look to see right now, but if it really is seventy-five $1K T-bills, I'm really glad they don't list it that way at the brokerage. Imagine how long the page would be