I made sure I punched at auction & received back what appears to be a one year T bill with 3 months left.
Security: U S TREASURY BILL 0% 11/30/23 12/01/22 Price was $98.65
The T bill dated 12/01/22 shows 4.49 - 4.66 Bank discount & Coupon equivalent
That is the daily rate on the secondary market quotation on most recent auction of T-bills.
From conversation June 8 added below. Why was this a secondary purchase & not the first time it has happen.
I believe YBB gave me a follow up link for whom to contact.
Derf
June 8 in Other Investing Flag
Announcement 6/6, Auction 6/7 bought on 6/6 I received message today of purchased which showed 08/08/23 - 04/11/23. That appears to be a T-bill bought at market. Called VG today & rep said it was an auction purchase. I'll be calling tomorrow , bright & early to see if I can get a reason as to why this happened. If that T-bill was sold out, the order shouldn't have been filled. Maybe no fill or kill at VG ?
Anyone have any ideas ? Rep also mention it maybe a RO bill, reopened. If that is the case, wouldn't it show on the pre- schedule ?
Thanks, Derf
Comments
Sorry I brought this up again, Derf
P.S. That still leaves the question, Why the dating issue ?
Auction result:
https://www.treasurydirect.gov/instit/annceresult/press/preanre/2023/R_20230828_3.pdf
Announcement (original issue date 12/1/22):
https://www.treasurydirect.gov/instit/annceresult/press/preanre/2023/A_20230824_3.pdf
This security was auctioned off three times: originally as a 52 week T-bill (issued 12/1/22), then as a 26 week T-bill (issued 6/1/23), and now as a 13 week T-bill (to be issued 8/31/23).
https://www.treasurydirect.gov/auctions/auction-query/?cusip=912796ZD4
Because of 13-wk, 26-wk, 52-wk T-Bill issuances, some maturing dates for 13-wk T-Bills will coincide with those for 26-wk and 52-wk T-Bills. Similar for 26-wk and 52-wk T-Bills.
When the T-Bill maturity dates are the same, and the coupon rates are all 0% (because T-Bills are sold at discounts), Treasury uses the same CUSIP# for them. Treasury doesn't call these reopening, nor marks them as such in the Treasury Auction Schedule - in fact, Treasury says that T-Bills don't have reopening.
So, how does one figure out what is going on?
1. Matching T-Bill CUSIP# is one way but that is tedious, even with Treasury site CUSIP search. For example, a search on CUSIP# 912796ZD4 shows that related 13-wk, 26-wk, 52-wk have maturity dates of 11/30/23 (see this link by @msf).
https://www.treasurydirect.gov/auctions/auction-query/?cusip=912796ZD4
2. Comparing T-Bill Original Issue Dates with actual Issue Dates is another way, but that information is lost in the Treasury Auction Results data fields as there are other more important data for rates, spreads of bids, etc. However, the Treasury Auction Announcements have the Auction Date, Original Issue Date, actual Issue Date, and Maturity Date.
13-wk Auction Announcement for 8/28/23 (Maturity 11/30/23)
https://www.treasurydirect.gov/instit/annceresult/press/preanre/2023/A_20230824_3.pdf
(Note that Original Issue Date and actual Issue Date don't match)
52-wk Auction Announcement for 11/29/22 (Maturity 11/30/23)
https://treasurydirect.gov/instit/annceresult/press/preanre/2022/A_20221123_3.pdf
(Note that Original Issue Date and actual Issue Date match)
One can also verify the the CUSIP# in these 13-wk and 52-wk Auction Announcements match.
Have a great week, Derf
Conceptually, the difference between buying "at auction" and in the secondary market is the difference between buying a security when issued by an institution (i.e. the Treasury selling new bonds) and buying a security from someone who already owns the security.
There are lots of small details that are different - auctions happen periodically, secondary market is continuous; auction price is approximate (you place your order knowing only roughly what the price will be), secondary market price is precise; auction purchases can be made through Treasury Direct as well as through a broker, secondary market purchases are through brokers only; and so on.
Here's a good piece by The Finance Buff on secondary market Treasuries. Its length shows you why I'm not explaining more here. It's worth the read and should answer most of your questions.
https://thefinancebuff.com/buy-treasury-secondary-market.html
Treasuries bought at Treasury Direct must be held to maturity. If you want to sell before maturity, you have to transfer them to a brokerage and then sell. So, why not buy at brokerage (at Auction or in the secondary market) in the first place?
Buying in the secondary market is continuous during the market hours, but there are bid-ask based on which Treasury you are buying and how much. Of course, there are no fees or commissions for them at major brokerages (as there are for bonds generally). Treasury ladders can be setup easily with secondary market purchases.
Treasuries are exempt from state/local taxes.
Unlike CDs, Treasury secondary markets are very liquid. So, T-Bill/Note should be preferred if their yields are close to those of the CDs. The CDs sales on secondary markets may be hit or miss - you may get lucky if there is a ready buyer, or may get a decent haircut. But T-Bill/Notes and CDs are to be held to maturity to the extent possible.
A rhetorical question but one with a real answer. While many brokerages let you buy and sell Treasuries (at auction or in the secondary market) with no commission, some don't.
For example, at Merrill if you want to buy an auction Treasury you have to go through a human being*. You will get charged a commission for that service. If the only accounts you have are at Merrill and at TreasuryDirect, you have three choices: (1) buy at TD, (2) pay a commission and buy at Merrill, or (3) open a new brokerage account.
Buying at TreasuryDirect combines ease and economy in this rare confluence of circumstances. The moral of the story is to make sure that you can trade Treasuries commission-free at your brokerage.
* Online auction Treasuries not available at Merrill according to The Finance Buff. I have not been able to find any information about upcoming auctions at merrilledge.com (i.e. I can't purchase online). While some brokerage review sites say that you can buy auction Treasuries online at Merrill, that appears to be based on a sloppily worded pricing list.
Newly issued short term T bills, 13 week and 26 week have their auction every Monday. It would be good idea to place your order on Sunday night and the order will be filled by end of Monday. Longer term T bills and notes have their schedule. Personally I buy 13 week, 26 week and 52 week T bills to construct ladders.
Several advantages of T bills over CDs:
1. after tax return since T bills are state tax-exempt.
2. Liquidity. Easy to sell before maturity in secondary market.
3. Large $ amount can be purchase at auction.
Last year MFO have had several treads on T bills that provide additional details.
EVERY 13-wk T-Bill has the same CUSIP# as some 26-wk T-Bill.
The 4th issuances of 13-wk and 26-wk T-bills have the same CUSIP# as some 52-wk T-Bill.
But Treasury won't call these reopening (even when it may appear so to us). The only difference I see is that their amounts outstanding aren't combined. Also, some brokerage sites may fail to find all these CUSIPs (as the Treasury site does) - there was a discussion of this for Schwab in another thread.
When Treasury uses the term reopening, it combines all issuances into a large total outstanding and Treasury says that it improves the liquidity of that Treasury issue. Treasury says that there are also (formal) reopening only for 2-Yr FRNs, 20-Yr & 30-Yr T-Bonds, 10-Yr & 30-Yr TIPS, and NOTHING ELSE.
Maybe I'm just not comprehending what you guys are stating and see as obvious. Quite likely
One can look at trading on Fridays and Tuesdays, the day-before and day-after the Monday Auction (except when Monday is a holiday). Just a quick look at the chart shows that rates are generally higher (prices lower) the day-after the Auction, but they are more random the day-before the Auction. Of course, the Treasury market is also affected by news and Friday-Monday gap may be an eternity, but not so for the Monday-Tuesday gap.
Unless one is playing with large $amounts, the profits to be realized by this sort of trading may be tiny. You will also be competing with Treasury dealers (Primary or general). https://en.wikipedia.org/wiki/Primary_dealer
https://stockcharts.com/h-sc/ui?s=$IRX&p=D&b=5&g=0&id=p75047699867
Finally, the differences are tiny when you think annually.