Joined Nov 2010
L5: Journeyman
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US Treasury CMB 161-day bill. Expected yield 5.27%, may go higher
May 25, 2023 at
02:49 PM
in
Finance
(7)
Deal Details
Last Edited by zjs2k May 31, 2023 at 02:27 AM
NOTE:
The yields listed here are annualized (APY).
The CUSIP for this CMB is 912797FJ1.
Current expected yield according to Fidelity is 5.3% (May 26), 5.268% (May 27).
Final edit: the result was out (May 30): 5.562% (investment rate, equivalent to APY).
This thread was moved out of the "Hot Deals" forum (understandably. I don't think Treasury will give SD a cut for promoting their T-Bills Haha!). Despite received much less attention than the other Treasury threads, I hope everyone read this got some useful information (like the difference between CMB and T-bills, or there are bills called CMB). I can't vouch for anyone else's comments here, but I tried to be clear about things that I know, I assume, I guess or I don't know in my comments.
Final recommendation: continue to purchase the Bills of all durations as long as they remain high yields. At 5+% yield with essentially 0 risk, it makes the risky investment in stocks / bitcoin or similar becomes less and less attractive.
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Since Treasury's CMB doesn't have a fixed schedule, which leads to less competitive bids, which in turn **usually"" leads to higher yield. This 161-day bill announced today has an expected yield of 5.27% according to Fidelity. But it **could** be higher. Example: last week's 21-day bill estimated yield ~ 5.5% (can't remember exactly). The final yield was 6.3+%.
Note: you can only buy it through brokers. Fidelity allows multiples of $1000 ("1 bond"). ETrade is multiples of $5000.
Seepost #163771055 for additional info on ETrade (Thanks to Jayman007)
The auction day is May 30. Be sure to place the order before then. (Before 12 AM for non-competitive CMB. Brokers may stop take orders before then. So place order early.)
https://www.treasurydir
The yields listed here are annualized (APY).
The CUSIP for this CMB is 912797FJ1.
Current expected yield according to Fidelity is 5.3% (May 26), 5.268% (May 27).
Final edit: the result was out (May 30): 5.562% (investment rate, equivalent to APY).
This thread was moved out of the "Hot Deals" forum (understandably. I don't think Treasury will give SD a cut for promoting their T-Bills Haha!). Despite received much less attention than the other Treasury threads, I hope everyone read this got some useful information (like the difference between CMB and T-bills, or there are bills called CMB). I can't vouch for anyone else's comments here, but I tried to be clear about things that I know, I assume, I guess or I don't know in my comments.
Final recommendation: continue to purchase the Bills of all durations as long as they remain high yields. At 5+% yield with essentially 0 risk, it makes the risky investment in stocks / bitcoin or similar becomes less and less attractive.
=======
Since Treasury's CMB doesn't have a fixed schedule, which leads to less competitive bids, which in turn **usually"" leads to higher yield. This 161-day bill announced today has an expected yield of 5.27% according to Fidelity. But it **could** be higher. Example: last week's 21-day bill estimated yield ~ 5.5% (can't remember exactly). The final yield was 6.3+%.
Note: you can only buy it through brokers. Fidelity allows multiples of $1000 ("1 bond"). ETrade is multiples of $5000.
Seepost #163771055 for additional info on ETrade (Thanks to Jayman007)
The auction day is May 30. Be sure to place the order before then. (Before 12 AM for non-competitive CMB. Brokers may stop take orders before then. So place order early.)
https://www.treasurydir
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Go to trading
go to bonds and CDs
The first thuing you see is US treasuries.
https://www.youtube.com/watch?v=r...eMc
These videos do not take that long to watch.
https://www.youtube.com/watch?v=luCA-a-FPX8
The presenter has how-to videos also for Fidelity and Schwab.
When you buy T-bills at auction, you are not charged a commission by Vanguard, Fidelity, and Schwab. I can't attest if other brokers charge a commission for auctioned T-bills. In contrast, brokerages usually charge a commission on T-bill bought or sold on the secondary market. If you're buying a couple of T-bills on the secondary market, your total return may not be that much greater than if you bought at auction due to the commission.
The above YouTube video presenter, Diamond NestEgg, has numerous videos on Cash Management Bills (CMB) and explains the difference between T-bills and CMBs. https://www.youtube.com/watch?v=-Zj5a80qbRI
The income from T-bills are tax exempt from state and local taxes, not federal. To an extent federal money market funds can also be tax exempt but depends upon your state. Some states may disallow income from a federal money market fund depending on what type of securities were held, for example T-bills versus repos. Over at https://bogleheads.org/forum/viewforum.php?f
https://www.bogleheads.
https://www.bogleheads.
Vanguard, Fidelity, & Schwab do not charge a fee for their own money market funds. While these discussions focus on Vanguard, the same principle applies to federal money market funds from other brokerages.
Finally, your end of year 1099-DIV from a federal money market fund may not provide information as to the proportion of the fund that was held in tax except government securities. However, brokerages can supply that information.
Finally, if you have a brokerage account at Vanguard (or Fidelity), the cash transferred into the account is invested immediately into their Federal Money Market Fund, VMFXX, as it is their settlement account.
This is awesome info for a newbie, thank you!
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Everyone will invest in their comfort zone. But IMO, if I keep waiting for better price, I will never actually buy anything. As investment, gradually entering is the way to go. Buy a bond ($1000) this week, another next week. If you have more money, spread them into different bills just in case there will be any dramatic changes.
Only large investors who would like to buy a few billion every week will enter competitive bidding, which will determine our final yield we get.
As I recall, CMB only thru broker only. So u only see tbill.
Why? All money when initially placed into a traditional IRA is not taxed;; consequently the entire proceeds (initial investment plus any profit) are taxed when taken out of the IRA.
In contrast, all money when initially placed into a Roth IRA is taxed, and when removed the entire amount is not taxed.
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