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So it appears I've acquired a T-bill in the secondary mark ? Wondering how that happened ? I thought I was buying a T-bill on 10/17 that settled on 10/20.
I would think that the treasury bill was priced at a discount, below 100, so that the effective yield would match the stated yield of a treasury bill issued today.
If you are buying 13-wk, 26-wk and/or 52-wk T-Bills for auction on Monday (10/31/22)/Tuesday (11/1/22), just be careful. As the announcements came out on Thursday, brokerages can accept orders after Thursday (10/27/22). Of course, Treasury Direct is now shut for maintenance all of Saturday and Sunday (you cannot login, but these general links should open - or may not).
@yogibearbull : You maybe right about purchasing the wrong button, but on the other hand it may have been the brokerage that pushed the wrong button ! Not to long ago Schwab billed me for using margin. I don't maintain a margin account, . also I had enough in the account to cover the purchase. Hopefully that problem has been remedied.
The last purchase, mentioed above, at VG I was to incur a fee if bought on the secondary market. I saw no mention on confirmation of a fee. As of now I'm waiting to see what the monthly statement looks like.
Issue resolved : Yesterday a purchase I made looked like another secondary buy. As I decided to call VG & see if I was loosing it or not. It turns out the purchases were from Treasury on a re-issue . A very nice lady worked me through the process & call back was used.
VG website is more clunky for buying individual bonds than that of Fidelity. Following @yogibb’s auction schedule and putting in my order a day or two ahead of the closing dates. At auction one get good prices just as the professional traders, where as secondary market retail investors have to pay a tad higher price.
Most Treasury auctions issue new Treasuries. But there are several Treasury auctions with reopened older issues - these reopened issues have the same as original issue date, CUSIP#, maturity date, interest rate. The auction announcement will indicate whether it is a reopened auction. But new auctions are held for them. For retail buyers, it doesn't matter whether an auction is for new issue or reopened issue.
@Sven, Treasury doesn't provide good explanations for reopenings. My guess is that it increases the size/liquidity of some Treasury CUSIP#. Most reopenings are 1-2 months after, but TIPS may be reopened 2-6 months after.
Is there good reasons to go longer duration treasury beyond 52 weeks, in light of the current yield curve?
Good question, @Sven: getting the best yield even if shorter term, vs. maybe locking in a decent yield, if not the highest, for longer, vs. saving powder for bond funds. December may be an important month in that calculation. Some of each of those might be a good answer.
Yes, you have pinpointed the important variables to consider as the interest rate situation is fluid. I am getting yields well above money market funds (in CDs and treasury ladders). Will continue to add as Fed hike rates in order to capture higher yields. When the yield curve flattens out, then it is time to go longer duration, > 2 years or longer. At that point, we may be in recession unfortunately. Hopefully that may be a mild recession and not nearly as bad as 2008’s GRC.
Will have adequate dry power to buy bond funds as the shorter duration CD and treasury mature. The timing depends on when the Fed stops rising rates. Second half of 2023? If recession gets bad and the Fed may cut rates. So there are number of different scenarios that can play out next year.
If you have new money to deploy, another 13- , 26- , 52- wk T-Bill auctions are near the month end, November 28/29 (Mon/Tue) (orders can be entered now), and then again on December 27 (Tue).
If want to extend maturity, may be use 2-yr T-Bill/Note ladder: 26-wk, 52-wk T-Bills; 18-mo (no auction; buy in secondary market)), 2-yr (auction December 27) T-Notes.
I already have several treasury ladders and will add more after Dec’s rate hike at auction. My only hesitation on 2 yr or longer notes is the inverted yield curve and their yields are lowered than those of 26 week and 52 week T bills.
Comments
Yes or No, Derf
In the Treasury purchase section at brokerages, the Auction and Secondary clicks are clearly indicated.
It seems that unintentionally, you went into the Secondary section, and bought what you thought was a 26-wk T-Bill, but you bought this 52-wk T-Bill in the secondary market with 26-wks remaining,
https://www.treasurydirect.gov/instit/annceresult/press/preanre/2022/A_20220414_4.pdf
The correct purchase would have been this 26-wk T-Bill,
https://www.treasurydirect.gov/instit/annceresult/press/preanre/2022/A_20221013_3.pdf
Don't lose sleep over it.
If you are buying 13-wk, 26-wk and/or 52-wk T-Bills for auction on Monday (10/31/22)/Tuesday (11/1/22), just be careful. As the announcements came out on Thursday, brokerages can accept orders after Thursday (10/27/22). Of course, Treasury Direct is now shut for maintenance all of Saturday and Sunday (you cannot login, but these general links should open - or may not).
Bookmark this Treasury Auction Schedule,
https://home.treasury.gov/system/files/221/Tentative-Auction-Schedule.pdf
Not to long ago Schwab billed me for using margin. I don't maintain a margin account, . also I had enough in the account to cover the purchase. Hopefully that problem has been remedied.
The last purchase, mentioed above, at VG I was to incur a fee if bought on the secondary market.
I saw no mention on confirmation of a fee. As of now I'm waiting to see what the monthly statement looks like.
Thanks for your reply, Derf
End of story, Derf
Treasury Schedule of Auction Reopenings https://www.treasurydirect.gov/auctions/when-auctions-happen/schedule-auction-reopenings/
Is there good reasons to go longer duration treasury beyond 52 weeks, in light of the current yield curve?
Will have adequate dry power to buy bond funds as the shorter duration CD and treasury mature. The timing depends on when the Fed stops rising rates. Second half of 2023? If recession gets bad and the Fed may cut rates. So there are number of different scenarios that can play out next year.
If want to extend maturity, may be use 2-yr T-Bill/Note ladder: 26-wk, 52-wk T-Bills; 18-mo (no auction; buy in secondary market)), 2-yr (auction December 27) T-Notes.
https://home.treasury.gov/system/files/221/Tentative-Auction-Schedule.pdf