Treasury Bills, Notes, and Bonds Discussion

[simple girl]

Could someone tell me where I can look to get an estimate of what t-bills are likely to go for at auction? Complete newbie here regarding treasuries. I would be purchasing through our Fidelity account.

 

[audreyh1]

I use the quotes from the CNBC app which shows secondary market bids to give me a general idea, and this reference from Treasury is useful too as it samples the secondary market near the end of each trading day. Use the coupon equivalent number. https://home.treasury.gov/resource-..._bill_rates&field_tdr_date_value_month=202305

 

[copyright1997reloaded]

Could someone tell me where I can look to get an estimate of what t-bills are likely to go for at auction? Complete newbie here regarding treasuries. I would be purchasing through our Fidelity account.

I use CNBC: https://www.cnbc.com/bonds/ to get an idea or to see after hours.

You could also use a CUSIP from the week before to see what they are going for in the secondary market (to get an idea of what this week's will now go for).

On Fidelity, I will often put an order in a day or two before, then decide the morning of (by 9:00AM as the Fidelity order cutoff is normally 9:30AM) whether to keep the order in or cancel it. Usually, I've been letting it ride.

 

[jazz4cash]

Yeah, it’s a bit crazy at the very short end.

More than a bit, I’d say.

 

[Sunset]

Could someone tell me where I can look to get an estimate of what t-bills are likely to go for at auction? Complete newbie here regarding treasuries. I would be purchasing through our Fidelity account.

This is my quick look spot:

https://personal.vanguard.com/us/FixedIncomeHome

Click on Treasuries, then pick the radio button auction to see the ones currently available and estimated interest rate.

 

[Graybeard]

While it would be terrible if the treasury can't pay it's bills, there is actually a 15 day grace period before an actual default is declared. I have T bills maturing the end of the 1st week in June (6/5 or 6/6 IIRC), if they can't pay the interest it just accrues until they have the money so not only will I be paid but those 4 week T bills will earn interest a little longer. Of course, I don't want that to happen and I would prefer to have them mature and be paid on time because the ramifications of not is not going to be pretty.

 

[pb4uski]

My fear with even a minor default is second, third and fourth order effects... unintended consequences, etc. Especially if a default results in SS, government employee and military pay not being paid so rent, loans, credit card bills are not paid, etc.

 

[copyright1997reloaded]

While it would be terrible if the treasury can't pay it's bills, there is actually a 15 day grace period before an actual default is declared. I have T bills maturing the end of the 1st week in June (6/5 or 6/6 IIRC), if they can't pay the interest it just accrues until they have the money so not only will I be paid but those 4 week T bills will earn interest a little longer. Of course, I don't want that to happen and I would prefer to have them mature and be paid on time because the ramifications of not is not going to be pretty.

Where do you see it would accrue?

I do know in the 1979 case the US Treasury at first did NOT pay extra accrued interest, and it took a suit and

it required both legal arm twisting and new legislation before Treasury made all investors whole for that additional interest.

source: https://www.forbes.com/sites/beltway/2011/05/26/the-day-the-united-states-defaulted-on-treasury-bills/?sh=6d90f3f830ad

But I am curious as to what the actual legislation was?

 

[AgedDawg49]

New member here. Posted a much longer question earlier that didn't go thru?
I'll try again with a short question for what others members think:
With the current situation regarding the debt limit and with a million in three 13 week laddered T bills, would you cash out as they mature and put the cash in the safe...cash out and buy gold or silver and put it n the safe...keep re-investing in the T Bills... or something else?

 

[Sunset]

New member here. Posted a much longer question earlier that didn't go thru?
I'll try again with a short question for what others members think:
With the current situation regarding the debt limit and with a million in three 13 week laddered T bills, would you cash out as they mature and put the cash in the safe...cash out and buy gold or silver and put it n the safe...keep re-investing in the T Bills... or something else?

Assuming you have an equalized $1M in stocks already.

I'd take the cash as they paid out, and turn around and buy a much longer ladder, of treasuries and FDIC insured CDs.

That's the problem with posting a simple, "should I" type of question without all the other relevant factors explained.

 

[AgedDawg49]

Assuming you have an equalized $1M in stocks already.

I'd take the cash as they paid out, and turn around and buy a much longer ladder, of treasuries and FDIC insured CDs.

That's the problem with posting a simple, "should I" type of question without all the other relevant factors explained.

Thanks for the reply. I did try to explain more in my original post which didn't go thru. Here's a synopsis:

I'm a retired farmer, 74 years old, one to years left before transfer to the other side, zero liabilities, stocks larger than what you recomend, realestate more than the above amounts, widowed with one son and family. I think I have every thing lined up for a quick transfer when I'm gone. My question was only concerning the excess cash in the meantime.

 

[copyright1997reloaded]

Thanks for the reply. I did try to explain more in my original post which didn't go thru. Here's a synopsis:

I'm a retired farmer, 74 years old, one to years left before transfer to the other side, zero liabilities, stocks larger than what you recomend, realestate more than the above amounts, widowed with one son and family. I think I have every thing lined up for a quick transfer when I'm gone. My question was only concerning the excess cash in the meantime.

Hopefully you are just being pessimistic about "one to years left". However, assuming you are not, one of the positives of many brokered CD's is that they have an estate protection option that allows the estate/beneficiary to redeem the CD early w/accrued interest.

Given the above, I would likely put some/most of the cash in 1 year CD's offering this option (across a number of issuing banks to avoid FDIC limits) to collect the 5.1-5.15% being offered on some of them.

 

[copyright1997reloaded]

ETA: Examples at Fidelity
5.15% TRUIST BANK, CUSIP DSN5C9413, 5/17/2024 maturity
5.15% PCB BANK, CUSIP DSN5C2676, 11/24/23 maturity
5.10% ALPINE BANK, CUSIP DSN5C5232, 9/20/24 maturity

 

[AgedDawg49]

Hopefully you are just being pessimistic about "one to years left". However, assuming you are not, one of the positives of many brokered CD's is that they have an estate protection option that allows the estate/beneficiary to redeem the CD early w/accrued interest.

Given the above, I would likely put some/most of the cash in 1 year CD's offering this option (across a number of issuing banks to avoid FDIC limits) to collect the 5.1-5.15% being offered on some of them.

Thank you very much for the reply...This is the kind of response I was hoping to get...Something to think about and consider.

 

[Graybeard]

Where do you see it would accrue?

I have seen that discussed a few times on CNBC on different shows by different people. I assumed your money stopped earning interest when the T bill matured but they said it would continue to earn interest. I am not hoping for a default, the extra interest would pale compared to the damage that would incur.

 

[indiajust]

Seeing how government debt has swung around wildly just gives me the jumps. I'm just not emotionally constructed to see sovereign debt have this much price variation. Stocks sure, corporate bonds to an extent ok..., but not sovereign debt.

I appreciate seeing the short end come up, but it makes me wonder if another shoe is going to drop.

I was expecting some financial repression from the fed, perhaps saving the small and regional banks that bought bonds at low rates gand et a free swap to avoid balance sheet damage is the plan.

My worry is that I won't get a free swap if the rates go against me.

Part of me knows that I'm irrational, but I just don't trust them enough to buy their debt, even at the much improved rates. Fear and doubt are clouding my judgement.

 

[Helen]

I have just over 1/2 million dollars scheduled to purchase T-bills that come due in October. I can't fathom that the US Government won't make good on these.

 

[Dash man]

We just had a $100k T-bill mature, and purchased a 5.1% One year CD from Synovus Bank instead of another treasury bill. I guess I don’t trust interest rates on treasuries to stay as high as they’ve been, so went with a slightly longer term CD.

 

[audreyh1]

Well today’s 26-week T-bill rate finally got back above my prior purchase.

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
13-Week	No	912796Z36	05/18/2023	5.060%	5.211%	$98.720944
26-Week	No	912797FK8	05/18/2023	4.980%	5.194%	$97.482333

52-week is up for auction tomorrow.

 

[Helen]

Well today’s 26-week T-bill rate finally got back above my prior purchase.

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
13-Week	No	912796Z36	05/18/2023	5.060%	5.211%	$98.720944
26-Week	No	912797FK8	05/18/2023	4.980%	5.194%	$97.482333

52-week is up for auction tomorrow.

Sweet! We bought a load of 26 week T-Bills. We need to stay short term as we try and decide whether to buy a winter place.

 

[Another Reader]

Well today’s 26-week T-bill rate finally got back above my prior purchase.

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
13-Week	No	912796Z36	05/18/2023	5.060%	5.211%	$98.720944
26-Week	No	912797FK8	05/18/2023	4.980%	5.194%	$97.482333

52-week is up for auction tomorrow.

Worked out well for me today, although I diverted a little to CD's.

 

[audreyh1]

This week’s T-bill auction results. T-bill rates are moving up sharply!

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
4-Week	No	912797FP7	05/23/2023	5.370%	5.482%	$99.582333
8-Week	No	912797FY8	05/23/2023	5.020%	5.144%	$99.219111
13-Week	No	912796Z36	05/18/2023	5.060%	5.211%	$98.720944
17-Week	No	912797GT8	05/23/2023	5.100%	5.274%	$98.314167
26-Week	No	912797FK8	05/18/2023	4.980%	5.194%	$97.482333
52-Week	No	912797FH5	05/18/2023	4.645%	4.896%	$95.303389

I notice that the 26-week rate is quoting above 5.3% on the secondary market today, so expecting another jump at the auction on Monday.

On the other hand the 4-week rate has settled back down, but still leading the pack.

 

[Dash man]

I have a bunch maturing in June…I hope they stay higher.

 

[audreyh1]

Me too. I have auto-roll happening on 6/1, auction is 5/30.

 

[jldavid47]

Here's an interesting article about how treasuries (and stocks) could be affected by a debt limit deal:

https://finance.yahoo.com/news/1-trillion-t-bill-deluge-100000738.html?guccounter=1

The gist of this is that once the limit is raised, the US Treasury department will be issuing a lot more debt than usual to replenish their cash stores which will drain liquidity and (likely) pressure interest rates on T-bills higher. Like I said, it's interesting. Will it play out that way? I have no idea.