My T-Bill Ladder May Be Ending

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dbc47
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My T-Bill Ladder May Be Ending

Post by dbc47 »

This morning I was ready to roll over another chunk of money into another T-Bill but looking at the rates currently showing on Vanguard I believe I have to at least pause my purchasing plans. It appears the rates, at least for the moment, are in the 4.69% range and lower vs 5% + for brokered CDs. I like T-Bills better for various reasons but I guess if I have to go with a CD to get a better rate I will. I know that Ally Bank is offering the 4.75% no-penalty CD which is another option as I already have an account there. The Vanguard settlement fund is approaching that rate fairly quickly it seems. I don't want to open up another account somewhere just to perhaps get a slightly better rate. Decisions, decisions. :?
exodusNH
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Re: My T-Bill Ladder May Be Ending

Post by exodusNH »

dbc47 wrote: Fri Mar 24, 2023 12:53 pm This morning I was ready to roll over another chunk of money into another T-Bill but looking at the rates currently showing on Vanguard I believe I have to at least pause my purchasing plans. It appears the rates, at least for the moment, are in the 4.69% range and lower vs 5% + for brokered CDs. I like T-Bills better for various reasons but I guess if I have to go with a CD to get a better rate I will. I know that Ally Bank is offering the 4.75% no-penalty CD which is another option as I already have an account there. The Vanguard settlement fund is approaching that rate fairly quickly it seems. I don't want to open up another account somewhere just to perhaps get a slightly better rate. Decisions, decisions. :?
If you have a state tax, the interest from CDs is taxable at that level.

If you might need the money early, Treasuries are easier to sell.
ArthurDigbySellers
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Re: My T-Bill Ladder May Be Ending

Post by ArthurDigbySellers »

If you have a state tax, the interest from CDs is taxable at that level.
I'm in a pretty high taxing state and for this reason, I will probably buy T-Bills this week, despite the high rate for brokered CDs. I missed the 5%+ rates for treasuries a couple weeks ago, which is disappointing, but 4.6 - 4.7%, state-tax free, is still pretty good.
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Kevin M
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Re: My T-Bill Ladder May Be Ending

Post by Kevin M »

I bought a 2.3 month bill yesterday at a yield of 4.44%. Of course that is disappointing compared to the 5.x% yields we were seeing recently, but still, for me this is a TEY of 5.04%, so I'm still pretty happy with this compared to CDs in taxable.

912796ZG7 UNITED STATES TREAS BILLS ZERO CPN 0.00000% 06/01/2023

Kevin
If I make a calculation error, #Cruncher probably will let me know.
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dbc47
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Re: My T-Bill Ladder May Be Ending

Post by dbc47 »

Thanks, your feedback helps. I'll just keep watching the rates as I'm in no big hurry to buy. A lot can change in a short period of time so any purchasing decision I have at the moment can take a 180-degree turn real quick.
aristotelian
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Re: My T-Bill Ladder May Be Ending

Post by aristotelian »

Yes, there is a pretty big gap at the moment between CDs and Treasuries. Just call it a bond ladder and proceed as usual.
Tom_T
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Re: My T-Bill Ladder May Be Ending

Post by Tom_T »

Bumping this thread... CD rates have come down quickly. These are the best secondary market non-callable CDs I see on Fidelity today. The Treasury yield for same duration is shown in parentheses, followed by difference between the two.

1 yr: 4.98 (4.39) +0.59
2 yr: 4.70 (3.52) +1.18
3 yr: 4.66 (3.57) +1.09
4 yr: 4.75 (3.41) +1.06
5 yr: 4.52 (3.36) +1.16

The current 30-day yield on Vanguard Intermediate Term Treasury is 3.41%. Short-Term Treasury is 4.34%.
rockstar
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Re: My T-Bill Ladder May Be Ending

Post by rockstar »

I’m not chasing yields here. CDs are too challenging to sell.
Tom_T
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Re: My T-Bill Ladder May Be Ending

Post by Tom_T »

rockstar wrote: Wed Apr 05, 2023 12:12 pm I’m not chasing yields here. CDs are too challenging to sell.
Right now, I'm comfortable with money market rates. I don't see any signs that the Fed is going to reverse course just yet.
rockstar
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Re: My T-Bill Ladder May Be Ending

Post by rockstar »

Tom_T wrote: Wed Apr 05, 2023 12:18 pm
rockstar wrote: Wed Apr 05, 2023 12:12 pm I’m not chasing yields here. CDs are too challenging to sell.
Right now, I'm comfortable with money market rates. I don't see any signs that the Fed is going to reverse course just yet.
Money markets tend to have liquidity issues during downturns. I’m sticking with 3 month t bills for now.

I can’t predict the Fed, so I’ll take their word for what they intend to do based on their latest dot plot. I expect one to two more increases.

https://www.gao.gov/products/gao-23-105535

https://www.federalreserve.gov/econres/ ... 012pap.pdf
Tom_T
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Re: My T-Bill Ladder May Be Ending

Post by Tom_T »

rockstar wrote: Wed Apr 05, 2023 12:25 pm
Tom_T wrote: Wed Apr 05, 2023 12:18 pm
rockstar wrote: Wed Apr 05, 2023 12:12 pm I’m not chasing yields here. CDs are too challenging to sell.
Right now, I'm comfortable with money market rates. I don't see any signs that the Fed is going to reverse course just yet.
Money markets tend to have liquidity issues during downturns. I’m sticking with 3 month t bills for now.

I can’t predict the Fed, so I’ll take their word for what they intend to do based on their latest dot plot. I expect one to two more increases.

https://www.gao.gov/products/gao-23-105535
What money markets had liquidity issues?
rockstar
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Re: My T-Bill Ladder May Be Ending

Post by rockstar »

Tom_T wrote: Wed Apr 05, 2023 12:31 pm
rockstar wrote: Wed Apr 05, 2023 12:25 pm
Tom_T wrote: Wed Apr 05, 2023 12:18 pm
rockstar wrote: Wed Apr 05, 2023 12:12 pm I’m not chasing yields here. CDs are too challenging to sell.
Right now, I'm comfortable with money market rates. I don't see any signs that the Fed is going to reverse course just yet.
Money markets tend to have liquidity issues during downturns. I’m sticking with 3 month t bills for now.

I can’t predict the Fed, so I’ll take their word for what they intend to do based on their latest dot plot. I expect one to two more increases.

https://www.gao.gov/products/gao-23-105535
What money markets had liquidity issues?
The Fed had to backstop MMFs during the 2020 downturn and the GFC. You can Google for specifics. I don’t want to run into liquidity issues when markets are tanking.
exodusNH
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Re: My T-Bill Ladder May Be Ending

Post by exodusNH »

rockstar wrote: Wed Apr 05, 2023 12:35 pm
Tom_T wrote: Wed Apr 05, 2023 12:31 pm
rockstar wrote: Wed Apr 05, 2023 12:25 pm
Tom_T wrote: Wed Apr 05, 2023 12:18 pm
rockstar wrote: Wed Apr 05, 2023 12:12 pm I’m not chasing yields here. CDs are too challenging to sell.
Right now, I'm comfortable with money market rates. I don't see any signs that the Fed is going to reverse course just yet.
Money markets tend to have liquidity issues during downturns. I’m sticking with 3 month t bills for now.

I can’t predict the Fed, so I’ll take their word for what they intend to do based on their latest dot plot. I expect one to two more increases.

https://www.gao.gov/products/gao-23-105535
What money markets had liquidity issues?
The Fed had to backstop MMFs during the 2020 downturn and the GFC. You can Google for specifics. I don’t want to run into liquidity issues when markets are tanking.
You do need to differentiate between ones holding commercial paper and those that don't.
anoop
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Re: My T-Bill Ladder May Be Ending

Post by anoop »

rockstar wrote: Wed Apr 05, 2023 12:35 pm
Tom_T wrote: Wed Apr 05, 2023 12:31 pm
rockstar wrote: Wed Apr 05, 2023 12:25 pm
Tom_T wrote: Wed Apr 05, 2023 12:18 pm
rockstar wrote: Wed Apr 05, 2023 12:12 pm I’m not chasing yields here. CDs are too challenging to sell.
Right now, I'm comfortable with money market rates. I don't see any signs that the Fed is going to reverse course just yet.
Money markets tend to have liquidity issues during downturns. I’m sticking with 3 month t bills for now.

I can’t predict the Fed, so I’ll take their word for what they intend to do based on their latest dot plot. I expect one to two more increases.

https://www.gao.gov/products/gao-23-105535
What money markets had liquidity issues?
The Fed had to backstop MMFs during the 2020 downturn and the GFC. You can Google for specifics. I don’t want to run into liquidity issues when markets are tanking.
There are different kinds of MMFs and the govt ones are now parking most of their money with the fed so there are unlikely to be liquidity issues. This is a change from where things were during GFC and 2020.
tunafish
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Re: My T-Bill Ladder May Be Ending

Post by tunafish »

rockstar wrote: Wed Apr 05, 2023 12:12 pm I’m not chasing yields here. CDs are too challenging to sell.
I have occasionally sold a CD. Not often. I call up Vanguard, say I'd like to sell CD x, the phone guy says I'll call you back in an hour with the best offer, I say okay, he does, and I say I'll take that and presto, it's done.
rockstar
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Re: My T-Bill Ladder May Be Ending

Post by rockstar »

anoop wrote: Wed Apr 05, 2023 12:48 pm
rockstar wrote: Wed Apr 05, 2023 12:35 pm
Tom_T wrote: Wed Apr 05, 2023 12:31 pm
rockstar wrote: Wed Apr 05, 2023 12:25 pm
Tom_T wrote: Wed Apr 05, 2023 12:18 pm

Right now, I'm comfortable with money market rates. I don't see any signs that the Fed is going to reverse course just yet.
Money markets tend to have liquidity issues during downturns. I’m sticking with 3 month t bills for now.

I can’t predict the Fed, so I’ll take their word for what they intend to do based on their latest dot plot. I expect one to two more increases.

https://www.gao.gov/products/gao-23-105535
What money markets had liquidity issues?
The Fed had to backstop MMFs during the 2020 downturn and the GFC. You can Google for specifics. I don’t want to run into liquidity issues when markets are tanking.
There are different kinds of MMFs and the govt ones are now parking most of their money with the fed so there are unlikely to be liquidity issues. This is a change from where things were during GFC and 2020.
But they’re still not run proof.
Bcdkgf
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Re: My T-Bill Ladder May Be Ending

Post by Bcdkgf »

it's been fun watching interest rates going up (more normal) and we certainly have benefited. .01 Percent Interest--Ugh! CDs may be in my future now.
Women and men plan, the Gods laugh.
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dbc47
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Re: My T-Bill Ladder May Be Ending

Post by dbc47 »

Diamond Nestegg just did a great video on Money Market funds.

https://www.youtube.com/watch?v=N53wZ_80abU
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