Floating rate Treasury Notes

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Floating rate Treasury Notes

Postby averageJoe » Sun Apr 29, 2012 6:20 pm

http://www.bloomberg.com/news/2012-04-2 ... sales.html

Is this something Vanguard might be interested in offering and if so where would they fit into the scheme of things? Looks like Fidelity might be offering a fund and they say MM's might be purchasers?
It might be interesting if they offered them in binds?
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Re: Floating rate Treasury Notes

Postby stratton » Sun Apr 29, 2012 11:27 pm

Really great article. Covers the pluses and minuses of why and when they would issue the bonds. It looks like we're inching a little closer to them every time a new article comes out. So it appears Treasury is seriously considering them.

If the interest reset interval is short enough they could be used in a MMF because that is effectively the "duration."

Basically the floaters are equivalent to rolling over tbills with the same duration as the reset interval.

Paul
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Re: Floating rate Treasury Notes

Postby Oicuryy » Mon Apr 30, 2012 9:53 am

The bigger news is Treasury selling T-bills at negative yields. See this WSJ story.
Money Managers Brace for a 'Negative' Era

Floating-rate notes will give money market mutual funds something to buy when T-bill rates are negative. Together they will relieve two of the three obstacles to lower rates identified in this blog post at the New York Fed.
Why Is There a “Zero Lower Bound” on Interest Rates?

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