US T bills - first time user

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Kevin M
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Re: US T bills - first time user

Post by Kevin M » Sat Jun 09, 2018 3:13 pm

bayview wrote:
Sat Jun 09, 2018 2:38 pm
Thanks, Kevin. I appreciate your reply, but my problem was that this info is often ephemeral. Although I was able to do all that and make comparisons when the Treasuries were available during auction, much of this vanishes afterwards. Similar issue when the bond markets are closed, which is the only time I can log on and mess around. (And yes, it was the new Treasuries, not new issue CDs, that I was ranting about.)
The market is closed now, yet the 3-month and 6-month Treasury auctions are open, and you can enter a buy order right now if you want. You'll see the "Buy" link to the left of Treasuries for which the auctions are open and you can enter an order (the 3-year, 10-year and 30-year also are open).

The auctions for 3-month and 6-month Treasuries open every Thursday morning, and close early Monday morning, so you can enter a buy order for them any time in between, day or night, weekday or weekend.

As far as the information vanishing at Vanguard, that's when you can go to TD and look at the investment rate in the auction result PDF.
I was able to use the information at the time I was buying, but since different things were bought at different times, I'm now trying to figure out what (if anything) I did right, lol.

Use the TD site to get the investment rate for the bills, and use the yield to maturity on the confirmations for the CDs.
btw, the recent run-up in CD's is doubtless due to the fact that we purchased them in early-to-mid April, and the coupon for each is now pretty much exactly that of the next-younger CD (the 3-year CD pays what the 2-years now pay, the 2-year now pays what the 18-months pay, etc.) You're welcome, everyone. :annoyed :D
Treasury and CD rates all have been rising fairly steadily since September of 2017. I started buying quite a lot of brokered CDs, individual munis, and a few Treasuries in December 2017, so I feel your pain. But it's the same for anyone who's holding fixed income in just about any form, which is why we see low or negative YTD and 1-year returns for bond funds, for example. Whether holding funds or individual securities, we've lost money lately.

Even direct CDs have essentially lost value, unless you have no early withdrawal penalty (EWP), and can close the CD with no penalty to open or buy another one at today's rates (available at some credit unions for IRA CDs if age 59 1/2 or older--I did one of these recently). Of course if your CD rate is low enough compared to today's rates, and your EWP is low enough, you could be better off than someone with a bond fund or brokered security, since your EWP could be less than the loss of market value in a fund or brokered security.

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Re: US T bills - first time user

Post by Doc » Sat Jun 09, 2018 3:31 pm

Regarding T-Bill quotes with Yield to Maturity data:

WSJ Data Center

Image

http://www.wsj.com/mdc/public/page/2_30 ... #treasuryB

No subscription needed.

This data is of the last market "close". During market hours you can get up to date quotes from your broker. If you can't you need to get another broker.
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Re: US T bills - first time user

Post by bayview » Sat Jun 09, 2018 3:40 pm

Doc wrote:
Sat Jun 09, 2018 3:31 pm
Regarding T-Bill quotes with Yield to Maturity data:

WSJ Data Center

Image

http://www.wsj.com/mdc/public/page/2_30 ... #treasuryB

No subscription needed.

This data is of the last market "close". During market hours you can get up to date quotes from your broker. If you can't you need to get another broker.
Thank you for the link. By mid-October (retirement), I'll have my day hours free!
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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Re: US T bills - first time user

Post by Kevin M » Sat Jun 09, 2018 6:27 pm

bayview wrote:
Sat Jun 09, 2018 3:40 pm
Thank you for the link. By mid-October (retirement), I'll have my day hours free!
I hope you understand by now that you do not need your day hours free to buy Treasuries at auction. You also don't need day hours free to look up the yields on the TD site I provided the link to to determine the yields you got for Tbills you bought.

You only need day hours free if you want to buy (or sell) on the secondary market, or for some reason look at quotes on the secondary market.

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Re: US T bills - first time user

Post by MnD » Wed Jun 20, 2018 7:05 pm

Purchased my first US T bill (13 week) at auction this week with 25% of what I had in Schwab Prime MM at 1.83%.
Investment rate on the auction results was 1.936% and with our state tax rate that corresponds to 2.03% taxable equivalent.
I plan to do this every 4 weeks until I have a rolling ladder with 75% in T-bills and 25% in Prime MM.
No aspirations of getting rich but I learned something new and seems like a pretty harmless way to tinker.
https://www.treasurydirect.gov/instit/a ... 0618_2.pdf

Not sure on a few details of rollover - the 13 week bills auction on Mondays and settle on Thursdays with maturity dates 13 weeks out also on Thursdays. Makes me wonder if within a given week I can buy at auction on the Monday prior to a bill maturing Thursday of that week without incurring a margin balance, since the maturity of the old bill and settlement date of the newly purchased bill are on the same day.

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Re: US T bills - first time user

Post by Doc » Thu Jun 21, 2018 7:22 am

MnD wrote:
Wed Jun 20, 2018 7:05 pm
Not sure on a few details of rollover - the 13 week bills auction on Mondays and settle on Thursdays with maturity dates 13 weeks out also on Thursdays. Makes me wonder if within a given week I can buy at auction on the Monday prior to a bill maturing Thursday of that week without incurring a margin balance, since the maturity of the old bill and settlement date of the newly purchased bill are on the same day.
You should have no margin cost. That said I had a similar situation happen at Schwab several years ago but I made several unrelated trades during the interim which led to an erroneous trade violation which they later fixed. The problem was due to the Treasury debit posting before opening and the credit posting after close.

I changed the account to a margin account but since then have never let a Treasury mature so I don't know if they fixed their algorithm. But I do sell the T the day before the auction settlement date with no margin cost.
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Re: US T bills - first time user

Post by MnD » Thu Jun 21, 2018 8:46 am

Doc wrote:
Thu Jun 21, 2018 7:22 am
MnD wrote:
Wed Jun 20, 2018 7:05 pm
Not sure on a few details of rollover - the 13 week bills auction on Mondays and settle on Thursdays with maturity dates 13 weeks out also on Thursdays. Makes me wonder if within a given week I can buy at auction on the Monday prior to a bill maturing Thursday of that week without incurring a margin balance, since the maturity of the old bill and settlement date of the newly purchased bill are on the same day.
You should have no margin cost. That said I had a similar situation happen at Schwab several years ago but I made several unrelated trades during the interim which led to an erroneous trade violation which they later fixed. The problem was due to the Treasury debit posting before opening and the credit posting after close.
Thanks Doc. I will try it next month (buy T-bill at Monday auction with settlement funds coming from a T-bill maturing on Thursday) and report back. The liquidity on these things are amazing - bid/ask spread of .002. I guess I should have known that given the 90-day bill has the reputation as one of the most liquid financial instruments in the world but seeing that in my account makes it real.

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Re: US T bills - first time user

Post by triceratop » Thu Jun 21, 2018 9:30 am

MnD wrote:
Wed Jun 20, 2018 7:05 pm
Purchased my first US T bill (13 week) at auction this week with 25% of what I had in Schwab Prime MM at 1.83%.
Investment rate on the auction results was 1.936% and with our state tax rate that corresponds to 2.03% taxable equivalent.
I plan to do this every 4 weeks until I have a rolling ladder with 75% in T-bills and 25% in Prime MM.
No aspirations of getting rich but I learned something new and seems like a pretty harmless way to tinker.
https://www.treasurydirect.gov/instit/a ... 0618_2.pdf

Not sure on a few details of rollover - the 13 week bills auction on Mondays and settle on Thursdays with maturity dates 13 weeks out also on Thursdays. Makes me wonder if within a given week I can buy at auction on the Monday prior to a bill maturing Thursday of that week without incurring a margin balance, since the maturity of the old bill and settlement date of the newly purchased bill are on the same day.
I recently asked a Schwab rep this question. You may find this post useful: viewtopic.php?f=1&t=244645&p=3951325&hi ... n#p3951969
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: US T bills - first time user

Post by Doc » Thu Jun 21, 2018 9:43 am

triceratop wrote:
Thu Jun 21, 2018 9:30 am
MnD wrote:
Wed Jun 20, 2018 7:05 pm
Purchased my first US T bill (13 week) at auction this week with 25% of what I had in Schwab Prime MM at 1.83%.
Investment rate on the auction results was 1.936% and with our state tax rate that corresponds to 2.03% taxable equivalent.
I plan to do this every 4 weeks until I have a rolling ladder with 75% in T-bills and 25% in Prime MM.
No aspirations of getting rich but I learned something new and seems like a pretty harmless way to tinker.
https://www.treasurydirect.gov/instit/a ... 0618_2.pdf

Not sure on a few details of rollover - the 13 week bills auction on Mondays and settle on Thursdays with maturity dates 13 weeks out also on Thursdays. Makes me wonder if within a given week I can buy at auction on the Monday prior to a bill maturing Thursday of that week without incurring a margin balance, since the maturity of the old bill and settlement date of the newly purchased bill are on the same day.
I recently asked a Schwab rep this question. You may find this post useful: viewtopic.php?f=1&t=244645&p=3951325&hi ... n#p3951969
That's a different question. MnD is asking about settlement dates and margin costs not auto rollovers.
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Re: US T bills - first time user

Post by triceratop » Thu Jun 21, 2018 10:26 am

Doc wrote:
Thu Jun 21, 2018 9:43 am
triceratop wrote:
Thu Jun 21, 2018 9:30 am
MnD wrote:
Wed Jun 20, 2018 7:05 pm
Purchased my first US T bill (13 week) at auction this week with 25% of what I had in Schwab Prime MM at 1.83%.
Investment rate on the auction results was 1.936% and with our state tax rate that corresponds to 2.03% taxable equivalent.
I plan to do this every 4 weeks until I have a rolling ladder with 75% in T-bills and 25% in Prime MM.
No aspirations of getting rich but I learned something new and seems like a pretty harmless way to tinker.
https://www.treasurydirect.gov/instit/a ... 0618_2.pdf

Not sure on a few details of rollover - the 13 week bills auction on Mondays and settle on Thursdays with maturity dates 13 weeks out also on Thursdays. Makes me wonder if within a given week I can buy at auction on the Monday prior to a bill maturing Thursday of that week without incurring a margin balance, since the maturity of the old bill and settlement date of the newly purchased bill are on the same day.
I recently asked a Schwab rep this question. You may find this post useful: viewtopic.php?f=1&t=244645&p=3951325&hi ... n#p3951969
That's a different question. MnD is asking about settlement dates and margin costs not auto rollovers.
I think they are related. I should say also, I don't have a margin account and they allowed this. So this is just their means of allowing their customers to do rollovers.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: US T bills - first time user

Post by MnD » Thu Jun 21, 2018 10:27 am

yes, the topics are related.
Schwab doesn't have an auto-rollover but it appears from Triceratops inquiry that the timing I proposed for manual rollovers (maturity date same data as settlement date of new purchase) will work at Schwab.

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Re: US T bills - first time user

Post by Doc » Thu Jun 21, 2018 10:59 am

Nitpick for clarity.

Selling a Treasury one business day before settlement or having one mature on the settlement date of a new Treasury purchased either on the open market or at auction is "allowed" by (SEC?) regulations.

Whether or not rolling a maturing Treasury into a new Treasury automatically is an individual broker's policy.

I think we all agree. :D
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Re: US T bills - first time user

Post by triceratop » Thu Jun 21, 2018 11:14 am

Doc wrote:
Thu Jun 21, 2018 10:59 am
Selling a Treasury one business day before settlement or having one mature on the settlement date of a new Treasury purchased either on the open market or at auction is "allowed" by (SEC?) regulations.
Sure, but we see enormous variation amongst various brokers' policies regarding equity/stock ETFs and settlements so it is far from obvious something subtle like this would work as you might best expect it from a customer perspective.

Now we all agree :)
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Re: US T bills - first time user

Post by Doc » Thu Jun 21, 2018 11:57 am

Trade Settlement:

Mutual funds:
Mutual funds can be bought and sold daily. However, unlike equities and other types of securities that trade on the secondary market throughout each trading day, share transactions in a fund are carried out once each day after the close of market at 4 p.m. EST (Eastern Standard Time). With the exception of money market mutual funds, the clearing of a trade transaction is executed over the following one to three business days, depending on the fund company and the type of fund.
https://www.investopedia.com/ask/answer ... z5J4tTESOW

Stocks & ETFs:

The Securities and Exchange Commission's new rule amendment
The T+2 rule amendment applies to the same securities transactions that were covered by the T+3 settlement cycle. These include transactions for stocks, bonds, municipal securities, exchange-traded funds, certain mutual funds and limited partnerships that trade on an exchange. The T+2 requirement does not apply to certain other categories of securities, such as exempted securities.
http://www.finra.org/investors/highligh ... wo-is-here

Treasuries:

(I'm having trouble finding a good reference here.) As far as I know treasury notes and bonds settle on the next business day for market transactions and some other time for new issues as specified in the auction announcement. But for T-bills I found this:
Treasury bills are about the only security that can be transacted and settled on the same day.
Read more: What do T+1, T+2 and T+3 mean? | Investopedia https://www.investopedia.com/ask/answer ... z5J50AhNgb
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Re: US T bills - first time user

Post by danielc » Sun Jul 15, 2018 6:08 pm

Kevin M wrote:
Thu May 24, 2018 12:07 pm
In other threads, we've discovered that Schwab seems to give higher yields for minimum quantity 10 than does Fidelity--maybe even higher than for larger quantities. They appear to be making buying Treasuries more attractive for small investors--perhaps to attract and retain their business.
Just so I'm clear ... this is a non-issue if I buy at the auction through Fidelity. Right? I'm pretty sure I have the correct answer but I'd rather ask.

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Re: US T bills - first time user

Post by Kevin M » Sun Jul 15, 2018 8:41 pm

danielc wrote:
Sun Jul 15, 2018 6:08 pm
Kevin M wrote:
Thu May 24, 2018 12:07 pm
In other threads, we've discovered that Schwab seems to give higher yields for minimum quantity 10 than does Fidelity--maybe even higher than for larger quantities. They appear to be making buying Treasuries more attractive for small investors--perhaps to attract and retain their business.
Just so I'm clear ... this is a non-issue if I buy at the auction through Fidelity. Right? I'm pretty sure I have the correct answer but I'd rather ask.
Yes. It's a non-issue for purchases at auction using any broker that doesn't charge a commission (like Fidelity or Vanguard), since you get the same price/yield as the institutional investors buying millions of dollars worth of the same issue.

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Re: US T bills - first time user

Post by MnD » Sat Jul 28, 2018 10:21 am

The yield on the 13-week bill should start moving from the 2% range to the 2.25% range soon.
About two months prior to quarterly FOMC meetings where rate hikes have been telegraphed is when things seem to get moving from the current target range to the expected one (see table below). My next scheduled 13 week bill purchase is the August 20 auction so hopefully I'll capture a fair share of the expected move by then. My ladder of 13-week notes rolling over every 4-5 weeks for 75% of cash with 25% in MM fund will be complete then.
https://www.treasury.gov/resource-cente ... &year=2018

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Re: US T bills - first time user

Post by gmaynardkrebs » Sat Jul 28, 2018 10:32 am

MnD wrote:
Sat Jul 28, 2018 10:21 am
The yield on the 13-week bill should start moving from the 2% range to the 2.25% range soon.
About two months prior to quarterly FOMC meetings where rate hikes have been telegraphed is when things seem to get moving from the current target range to the expected one (see table below). My next scheduled 13 week bill purchase is the August 20 auction so hopefully I'll capture a fair share of the expected move by then. My ladder of 13-week notes rolling over every 4-5 weeks for 75% of cash with 25% in MM fund will be complete then.
https://www.treasury.gov/resource-cente ... &year=2018
You don't think extending to 26 or 52 weeks would pay off?

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Re: US T bills - first time user

Post by MnD » Sat Jul 28, 2018 2:43 pm

gmaynardkrebs wrote:
Sat Jul 28, 2018 10:32 am
MnD wrote:
Sat Jul 28, 2018 10:21 am
The yield on the 13-week bill should start moving from the 2% range to the 2.25% range soon.
About two months prior to quarterly FOMC meetings where rate hikes have been telegraphed is when things seem to get moving from the current target range to the expected one (see table below). My next scheduled 13 week bill purchase is the August 20 auction so hopefully I'll capture a fair share of the expected move by then. My ladder of 13-week notes rolling over every 4-5 weeks for 75% of cash with 25% in MM fund will be complete then.
https://www.treasury.gov/resource-cente ... &year=2018
You don't think extending to 26 or 52 weeks would pay off?
Not with the fed raising rates every quarter and the yield curve getting flatter. And personally I'm just having fun with my spending account. My real emergency fund is 100% in stocks using this approach paired with the the TSP G fund at 2.875%.
https://www.bogleheads.org/wiki/Placing ... ed_account

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