My T-Bill Ladder May Be Ending
My T-Bill Ladder May Be Ending
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.
Re: My T-Bill Ladder May Be Ending
If you have a state tax, the interest from CDs is taxable at that level.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 might need the money early, Treasuries are easier to sell.
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Re: My T-Bill Ladder May Be Ending
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.If you have a state tax, the interest from CDs is taxable at that level.
Re: My T-Bill Ladder May Be Ending
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
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.
Re: My T-Bill Ladder May Be Ending
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.
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Re: My T-Bill Ladder May Be Ending
Yes, there is a pretty big gap at the moment between CDs and Treasuries. Just call it a bond ladder and proceed as usual.
Re: My T-Bill Ladder May Be Ending
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%.
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%.
Re: My T-Bill Ladder May Be Ending
I’m not chasing yields here. CDs are too challenging to sell.
Re: My T-Bill Ladder May Be Ending
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
Re: My T-Bill Ladder May Be Ending
What money markets had liquidity issues?rockstar wrote: ↑Wed Apr 05, 2023 12:25 pmMoney 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
Re: My T-Bill Ladder May Be Ending
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.Tom_T wrote: ↑Wed Apr 05, 2023 12:31 pmWhat money markets had liquidity issues?rockstar wrote: ↑Wed Apr 05, 2023 12:25 pmMoney 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
Re: My T-Bill Ladder May Be Ending
You do need to differentiate between ones holding commercial paper and those that don't.rockstar wrote: ↑Wed Apr 05, 2023 12:35 pmThe 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.Tom_T wrote: ↑Wed Apr 05, 2023 12:31 pmWhat money markets had liquidity issues?rockstar wrote: ↑Wed Apr 05, 2023 12:25 pmMoney 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
Re: My T-Bill Ladder May Be Ending
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.rockstar wrote: ↑Wed Apr 05, 2023 12:35 pmThe 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.Tom_T wrote: ↑Wed Apr 05, 2023 12:31 pmWhat money markets had liquidity issues?rockstar wrote: ↑Wed Apr 05, 2023 12:25 pmMoney 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
Re: My T-Bill Ladder May Be Ending
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.
Re: My T-Bill Ladder May Be Ending
But they’re still not run proof.anoop wrote: ↑Wed Apr 05, 2023 12:48 pmThere 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.rockstar wrote: ↑Wed Apr 05, 2023 12:35 pmThe 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.Tom_T wrote: ↑Wed Apr 05, 2023 12:31 pmWhat money markets had liquidity issues?rockstar wrote: ↑Wed Apr 05, 2023 12:25 pmMoney 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
Re: My T-Bill Ladder May Be Ending
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.
Re: My T-Bill Ladder May Be Ending
Diamond Nestegg just did a great video on Money Market funds.
https://www.youtube.com/watch?v=N53wZ_80abU
https://www.youtube.com/watch?v=N53wZ_80abU