Treasury Bills, Notes, and Bonds Discussion

[Midpack]

Yeah, we never have threads that go off on tangents here at e-r.org.

I know, high is why we have to work extra hard to keep these long running useful threads on topic.

Agree, but I’ve never seen that work. Even some former mods/admins can’t stay on topic…

 

[audreyh1]

This Treasuries thread has stayed amazingly on topic most of the time. Occasionally it gets derailed by extended national debt or debt ceiling discussions, but those need to be in different threads so people so inclined should start new threads instead of bogging down this one.

Now can we get back to investing in treasuries?

 

[dobig]

10 year above 4.15 and pushing towards the Oct 2022 highs.

 

[Marc]

10 year above 4.15 and pushing towards the Oct 2022 highs.

If employment comes in hot Friday and CPI hot next Wednesday the 10yr could really get going.

 

[TheCaptain67]

Bill Ackerman is shorting 30 year treasuries, believing they could reach 5.5%

https://www.reuters.com/markets/us/...-he-is-shorting-30-year-treasuries-2023-08-03

 

[dobig]

Bill Ackerman is shorting 30 year treasuries, believing they could reach 5.5%

https://www.reuters.com/markets/us/...-he-is-shorting-30-year-treasuries-2023-08-03

Saw that this morning. Wondering what that would do to corporates and GSE's? 6.5% - 7% non callable?

I completely sold off all my bonds and notes the past few weeks when rates fell and am sitting on 75% cash making 5% in money markets. Don't want to be too greedy but his is shaping up nicely if one is a little patient.

 

[TheCaptain67]

Wondering what that would do to corporates and GSE's? 6.5% - 7% non callable?

Hard to say, as most corporates are a shorter duration than 30 years.

But I certainly welcome a more normal yield curve and decent longer-term rates than we have had in the last 10 years……

 

[MichaelB]

This Treasuries thread has stayed amazingly on topic most of the time. Occasionally it gets derailed by extended national debt or debt ceiling discussions, but those need to be in different threads so people so inclined should start new threads instead of bogging down this one.

Exactly

Now can we get back to investing in treasuries?

+1

 

[Cat-tirement]

Since getting out of bond funds last year, I have been buying mostly T-bills, plus a couple of 2 year Notes, and a few CDs when rates jumped last March. I am starting to think about some longer treasuries, 2 and 3 year, and maybe even 5 year. With recent news about the Treasury Dept planning to increase auction sizes for 2+ year notes and bonds (in articles such as these)

https://fortune.com/2023/07/31/how-big-federal-debt-deficit-treasury-bonds-auction-markets/

https://wolfstreet.com/2023/08/02/h...monthly-auction-sizes-60-by-august-next-year/

How do you more experienced folks think this will affect prices/rates, and how soon? I had been looking to add some 2 and 3 year notes this month, but maybe I should hold off for a bit?

 

[audreyh1]

This week’s T-bill auction results:

Bills	CMB	CUSIP	Issue Date	High Rate	Investment Rate	Price per $100
4-Week	No	912797GR2	08/08/2023	5.275%	5.385%	$99.589722
8-Week	No	912797GV3	08/08/2023	5.285%	5.418%	$99.177889
13-Week	No	912796YT0	08/03/2023	5.280%	5.441%	$98.665333
17-Week	No	912797HN0	08/08/2023	5.300%	5.484%	$98.248056
26-Week	No	912797GE1	08/03/2023	5.270%	5.504%	$97.335722

 

[copyright1997reloaded]

Bill Ackerman is shorting 30 year treasuries, believing they could reach 5.5%

https://www.reuters.com/markets/us/...-he-is-shorting-30-year-treasuries-2023-08-03

I've been traveling the last couple weeks, but back home for a while. This is a chart I did late 22 (updated with recent prices). It sure looks like the TLT rally (i.e. lowered long term yields) has met resistance and is falling back. (The red horizontal line is one I drew about 11 months ago).
http://tos.mx/8yuWlvX

Watch out below if TLT breaks support around 91 to 92. This chart is one of the reasons I haven't "gone long" in terms of picking up a lot of longer dated paper, i.e. the early 80's to 2020 long term bond rally broke, and a few months of declining long term rates hasn't been enough to pull me in.

I think long term rates can breech 6% before this is over, in the meantime I stick with the 5.3 - 5.6% shorter term paper.

Speaking of which, I'm thinking of going for the 1-year TBILL this upcoming Tuesday vs. the 6-month on Monday, mostly because I only get a crack at the 1-year bill once a month.

 

[ER604me]

Thought about starting a separate thread, but I’ll ask here first/instead. Unfortunately we lost the best (but not only) member resource we had IMO.

I have all my “fixed income” allocation in T Bills (almost all 26 wks) at over 5% weighted average yield - I haven’t seen any reason to go longer in the last year or so. But at some point (next 12 months?) Treasury yields will come down. I would like to lock in these higher rates for longer duration like 2-5 years for some of my fixed income allocation. For anyone else so inclined, how do you plan to pick the down inflection period?

I am not looking for perfect, just good. I wouldn’t be unhappy with the current yields for 2-5 year treasuries but I don’t think the window is closing real soon either.

I do watch this periodically. https://www.ustreasuryyieldcurve.com/

Midpack
Last fall and this spring I was able to lock in a lot of noncallable CD's of the 3-5 year duration at 5% to 5.1%. I'm hoping that the same environment comes available again. Do you have a preference of treasuries over CD's?

 

[Affinity4Investing]

Just FYI...


The I Bond exit ramp is now open; proceed with caution

Posted on August 6, 2023 by Tipswatch
Time redemptions to take full advantage of the recent 6.48% variable rate.
By David Enna, Tipswatch.com

 

[Midpack]

Midpack
Last fall and this spring I was able to lock in a lot of noncallable CD's of the 3-5 year duration at 5% to 5.1%. I'm hoping that the same environment comes available again. Do you have a preference of treasuries over CD's?

No preference exactly, just waiting for yields to clearly peak on both. We’re probably close but not there yet, and we have time to wait - e.g. yields aren’t going down dramatically any time soon, and won’t fall off a cliff anyway IMO.

 

[Gumby]

My plan for I-Bonds since 9/25/22

....
From that, we can calculate the May 2024 I-bond reset rate will be (318.531/312.401) -1) x 200) = 3.92%

If inflation goes down quicker, the rate will be lower. I personally think 8.4% annual inflation rate in September is too high, that the average inflation rate in 2022 will be slightly less than 8% and that the average in 2023 will be less than 5%.

If we take the Fed at its word as far as further rate increases, 2 year Treasuries may go above 5% in 2023, just as the I-bond rate falls below 5%. I might switch if that happens.

 

[pb4uski]

Most importantly:

...Redeeming I Bonds is a tricky transaction, because an I Bond must be held for 12 full months and then there is a 3-month interest penalty on I Bonds held less than 5 years. Get this wrong and you could lose 3 months of 6.48% interest, or more. For those I Bonds, the best strategy is wait a full 3 months after the 6.48% rate has completed, then redeem early in the next month. That way the penalty will apply to the 3.38% rate. ...

Just FYI...


The I Bond exit ramp is now open; proceed with caution

Posted on August 6, 2023 by Tipswatch
Time redemptions to take full advantage of the recent 6.48% variable rate.
By David Enna, Tipswatch.com

 

[Fermion]

5.5% is so tempting just to toss everything into.

That is $110,000 a year if you put $2 mil into 26 week treasuries. That is decent money. I mean yeah, inflation and all, but you could sleep through any financial turmoil.

 

[Another Reader]

5.5% is so tempting just to toss everything into.

That is $110,000 a year if you put $2 mil into 26 week treasuries. That is decent money. I mean yeah, inflation and all, but you could sleep through any financial turmoil.

The real estate is good for tax avoidance to some extent, but, yeah, $2MM in treasuries right now sounds like a darn good way to thumb my nose at the State of California for a year or few.

 

[Midpack]

5.5% is so tempting just to toss everything into.

That is $110,000 a year if you put $2 mil into 26 week treasuries. That is decent money. I mean yeah, inflation and all, but you could sleep through any financial turmoil.

That's funny, I never stopped to add it up. I'll get almost $70K from treasuries this year despite pushing as much treasury interest into next year as I could (space for Roth conversions). Thanks for making me take a minute to add it up!

 

[Fermion]

That's funny, I never stopped to add it up. I'll get almost $70K from treasuries this year despite pushing as much treasury interest into next year as I could (space for Roth conversions). Thanks for making me add it up!

That is so nice! You have zero worries with that too...doesn't matter if Google misses earnings or Exxon has a oil spill, your $70k is IN THE BANK.

 

[RetiredAndLovingIt]

That's funny, I never stopped to add it up. I'll get almost $70K from treasuries this year despite pushing as much treasury interest into next year as I could (space for Roth conversions). Thanks for making me take a minute to add it up!

Midpack, how do you push the treasury interest into next year? I thought it could be done but was told no in an earlier post.

 

[Montecfo]

Average time to first Fed rate cut

The average time from last Fed hike to first Fed cut is 5.5 months since 1972, according to Bloomberg and other sources.

So some nimbleness may be in order for those hoping to thread the needle.

 

[Midpack]

Midpack, how do you push the treasury interest into next year? I thought it could be done but was told no in an earlier post.

Buy longer maturities.

I was buying nothing but 13 and 26 week treasuries starting last year, and replacing with same at maturity. Since Mar/Apr when treasuries have matured in our taxable acct, I've just been buying treasuries that mature in 2024 instead.

• I had a 26 wk mature in Apr, bought a 52 wk with the proceeds instead of 26 wks.
• Had another 26 wk mature in late May that I waited to buy another 26 wk until next maturity was 1/4/24.
• Since VMFXX is paying decent interest, waiting a little while isn't $ painful.
• I don't have anything more maturing in taxable in 2023.

I am still buying whatever maturity I want in IRAs, mostly 13 or 26 week.

 

[aja8888]

It sure would be nice to see the 5 year go to 5%. I would be all over that.

 

[Trooper]

That is so nice! You have zero worries with that too...doesn't matter if Google misses earnings or Exxon has a oil spill, your $70k is IN THE BANK.

Yup!