Talk:CDs vs bonds

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Links to data sources from St Louis Fed:

--Blbarnitz 17:46, 9 January 2010 (UTC)

I added some explanatory text (for puts and calls) and changed some references of "bonds" to "CDs" when it seemed to clarify the text. Also added the tax factor. --Blbarnitz 06:48, 10 January 2010 (UTC)

I can make a graph for Google Spreadsheet - which data series?

Category: FRED > Categories > Interest Rates > Certificates of Deposit
Link: http://research.stlouisfed.org/fred2/categories/121
README File Created: 2010-01-08
FRED (Federal Reserve Economic Data)
Economic Research Division
Federal Reserve Bank of St. Louis

Series files in the data directory sorted by title:

File                                    ;Title; Units; Frequency; Seasonal Adjustment; Last Updated
WCD1M.xls                               ;1-Month Certificate of Deposit: Secondary Market Rate; %; W; NA; 2010-01-05
CD1M.xls                                ;1-Month Certificate of Deposit: Secondary Market Rate; %; M; NA; 2010-01-05
DCD1M.xls                               ;1-Month Certificate of Deposit: Secondary Market Rate; %; D; NA; 2010-01-08
WCD3M.xls                               ;3-Month Certificate of Deposit: Secondary Market Rate; %; W; NA; 2010-01-05
CD3M.xls                                ;3-Month Certificate of Deposit: Secondary Market Rate; %; M; NA; 2010-01-05
DCD90.xls                               ;3-Month Certificate of Deposit: Secondary Market Rate; %; D; NA; 2010-01-08
WCD6M.xls                               ;6-Month Certificate of Deposit: Secondary Market Rate; %; W; NA; 2010-01-05
CD6M.xls                                ;6-Month Certificate of Deposit: Secondary Market Rate; %; M; NA; 2010-01-05
DCD6M.xls                               ;6-Month Certificate of Deposit: Secondary Market Rate; %; D; NA; 2010-01-08

Category: FRED > Categories > Interest Rates > Treasury Bills
Link: http://research.stlouisfed.org/fred2/categories/116
README File Created: 2010-01-08
FRED (Federal Reserve Economic Data)
Economic Research Division
Federal Reserve Bank of St. Louis

Series files in the data directory sorted by title:
File                                    ;Title; Units; Frequency; Seasonal Adjustment; Last Updated
WTB1YA.xls                              ;1-Year Treasury Bill Rate: Auction Average (DISCONTINUED SERIES); %; W; NA; 2006-07-27
TB1YA.xls                               ;1-Year Treasury Bill Rate: Auction Average (DISCONTINUED SERIES); %; M; NA; 2006-06-07
DTB1YR.xls                              ;1-Year Treasury Bill: Secondary Market Rate; %; D; NA; 2010-01-08
TB1YR.xls                               ;1-Year Treasury Bill: Secondary Market Rate; %; M; NA; 2010-01-05
WTB1YR.xls                              ;1-Year Treasury Bill: Secondary Market Rate; %; W; NA; 2010-01-05
DTB1.xls                                ;1-Year Treasury Bill: Secondary Market Rate (DISCONTINUED SERIES); %; D; NA; 2001-08-24
WTB1YS.xls                              ;1-Year Treasury Bill: Secondary Market Rate (DISCONTINUED SERIES); %; W; NA; 2006-08-16
TB1YS.xls                               ;1-Year Treasury Bill: Secondary Market Rate (DISCONTINUED SERIES); %; M; NA; 2006-06-07
WTB3MA.xls                              ;3-Month Treasury Bill Rate: Auction Average (DISCONTINUED SERIES); %; W; NA; 2000-06-30
TB3MA.xls                               ;3-Month Treasury Bill Rate: Auction Average (DISCONTINUED SERIES); %; M; NA; 2000-06-01
TB3MS.xls                               ;3-Month Treasury Bill: Secondary Market Rate; %; M; NA; 2010-01-05
DTB3.xls                                ;3-Month Treasury Bill: Secondary Market Rate; %; D; NA; 2010-01-08
WTB3MS.xls                              ;3-Month Treasury Bill: Secondary Market Rate; %; W; NA; 2010-01-05
TB4WK.xls                               ;4-Week Treasury Bill: Secondary Market Rate; %; M; NA; 2010-01-05
DTB4WK.xls                              ;4-Week Treasury Bill: Secondary Market Rate; %; D; NA; 2010-01-08
WTB4WK.xls                              ;4-Week Treasury Bill: Secondary Market Rate; %; W; NA; 2010-01-05
TB6MA.xls                               ;6-Month Treasury Bill Rate: Auction Average (DISCONTINUED SERIES); %; M; NA; 2006-06-07
WTB6MA.xls                              ;6-Month Treasury Bill Rate: Auction Average (DISCONTINUED SERIES); %; W; NA; 2006-07-27
DTB6.xls                                ;6-Month Treasury Bill: Secondary Market Rate; %; D; NA; 2010-01-08
WTB6MS.xls                              ;6-Month Treasury Bill: Secondary Market Rate; %; W; NA; 2010-01-05
TB6MS.xls                               ;6-Month Treasury Bill: Secondary Market Rate; %; M; NA; 2010-01-05

Abbreviations:

Frequency
   A = Annual
   Q = Quarterly
   M = Monthly
   BW = Bi-Weekly
   W = Weekly
   D = Daily
Seasonal Adjustment
   SA = Seasonally Adjusted
   NSA = Not Seasonally Adjusted
   SAAR = Seasonally Adjusted Annual Rate
   NA = Not Applicable
--LadyGeek 17:04, 10 January 2010 (UTC)

Forum thread for this page is at: Treasuries vs. CDs: Differences, similarities, and portfolio --LadyGeek 17:43, 10 January 2010 (UTC)

My guess would be the 6 month daily compounded CD with the 6 month daily compounded t-bill. As an aside, it might prove interesting to see how much of the yield difference between the two instruments can attributed to the tax factor. For example, as a Virginia resident, I would pay a 5.75% tax on CD interest and 0% tax on treasury interest:
CD tax penalty for Virginia resident (tax rate 5.75%)
Interest Rate State tax
1% 0.06%
2% 0.12%
3% 0.17%
4% 0.23%
5% 0.29%
6% 0.35%
7% 0.40%
8% 0.46%
9% 0.52%
10% 0.58%
11% 0.63%
12% 0.69%
13% 0.75%
14% 0.81%
15% 0.86%

The tax penalty would be reduced if one can itemize state income tax on the federal return. --Blbarnitz 17:58, 10 January 2010 (UTC)

Graphs added, but the results don't support the statement about market differences in interest rates- at least from an overall tracking perspective. I don't know if the source of the data (fed vs. commercial bank rates) will affect the results.
The file was too large to be imported by Google Spreadsheet, done in Excel. I can increase the legend to be more visible, etc. Are these plots useful? --LadyGeek 23:33, 10 January 2010 (UTC)

Market History

This statement is somewhat confusing when comparing against the graph:

Nevertheless, the data presented below is likely a good first approximation of the historical behavior of the two bond categories, at least for ultra-short maturities.

Suggest:

Nevertheless, the data presented below is likely a good first approximation of the historical behavior of the two bond categories (represented as 6 month CDs and treasury bills), at least for ultra-short maturities.

To further simplify, I could expand the graph horizontally and eliminate the 1977 to present version. --LadyGeek 03:13, 13 January 2010 (UTC)

The two charts here don't show the difference clearly. I suggest just charting the yield difference over time, for example. Tfb 19:22, 4 September 2010 (UTC)

Charts replaced as suggested, created from the latest St. Louis Fed data. The Excel 2007 file is available for download (see External Links).

How the chart image was created:

  • Select chart, "Copy"
  • Open GIMP (GNU Image Manipulation Program - free open source photo editor), "Paste" to create the image.
  • Image --> Autocrop Image to remove the annoying unused (excess) border area caused by MS incompatibility with .png files.
  • Save as .png file, upload to wiki from there.

--LadyGeek 16:51, 5 September 2010 (UTC)