Floating rate Treasury Notes

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Floating rate Treasury Notes

Post by averageJoe » Sun Apr 29, 2012 5:20 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

Post by stratton » Sun Apr 29, 2012 10:27 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.

...and then Buffy staked Edward. The end.

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Re: Floating rate Treasury Notes

Post by Oicuryy » Mon Apr 30, 2012 8:53 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?

Money is fungible | Abbreviations and Acronyms

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