Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Right Now: Treasuries vs CDs

Looking at Schwab just now, short-term (1 yr) Treasuries are running around 4.5%, but bank CDs are still around 5.25%.
«1

Comments

  • I see 1-year Treasuries at 4.9% currently, and six month ones at 5.2%: https://ustreasuryyieldcurve.com/
    But that assumes you are buying Treasuries directly I imagine.
  • True, I moved some of my savings to a 4.9% 19-month CD at Synchrony this AM. They had one still at 5%, the 14-month one.
  • If you purchase newly issued CDs, the yield to maturity is exactly as issued... that isn't affected by market gyrations. Treasuries available at a brokerage, on the other hand, will continually fluctuate in yield as the market dictates.
  • Factor in when you will need money and state tax

    If you plan to buy equities if they come on sale, treasuries probably better idea.
  • sma3 said:

    Factor in when you will need money and state tax

    If you plan to buy equities if they come on sale, treasuries probably better idea.

    I'm thanking @Devo right about now.
  • edited March 2023
    Strong rally in bonds. But now we have to deal with the inflation tomorrow. Imagine the horrors of a strong inflationary print and banking halts. Don’t envy the FED.
  • String Rally.... Not a term I'm familiar with. Help?
  • Strong
  • sma3 said:

    Factor in when you will need money and state tax

    If you plan to buy equities if they come on sale, treasuries probably better idea.


    So if I buy a 6 month treasury, is it pretty easy to sell it prior to maturity? I understand it’s possible that I could lose some principal if rates go back up….

  • I will let others speak to the ease of selling Treasuries at Schwab etc, as I have held all of mine to maturity

    However I have bought many and as long as you are willing to accept the price offered ( I am not savy enough to try to "play " the treasury market ) it is just one click on the "order button"

    Remember though that unlike stocks and etfs etc, they settle that day so you have to have cash or a sweep account to cover the cost

    I learned the hard way and Schwab charged me for a margin loan when I bought a treasury the same day as selling some stock. When I complained ignorance, they forgave the $3.2
  • Yes, one could LOSE money by selling T-Bills/Notes or CDs before MATURITY. But Treasuries being very liquid, loss may be minor (rate dependent only), but for brokered CDs without much secondary market, the haircut may be big (like a buzz-cut?).

    Both will show FLUCTUATING values in the statements. Both will pay PAR/FACE VALUE at maturity.
  • Devo said:

    Strong

    Ah, just a typo. OK.

  • edited March 2023
    Buy 3 mo, 6 mo and 12 mo treasury bills and hold till maturity as a ladder. Every 3 months you will have cash available. Build a second ladder 6 weeks later in between the first one in order to reduce time for available cash.

    Buying at auction (pay attention to the schedule) is easiest way to get started.
  • When buying brokered CDs, do folks research the issuing bank, or not?
  • @DavidF. If you looked at the grades on the recent failed banks what would it have revealed?
  • larryB said:

    @DavidF. If you looked at the grades on the recent failed banks what would it have revealed?

    That's what I was thinking...
  • @DavidF- no, they're all FDIC insured, and as others have sad, who knows anything anyway, really?
  • edited March 2023
    T bill rates are heading back up; tonight 4m and 6m are back above 5%. That was quick.
  • @Andy, overnight the treasury yield fell again from last night. Both 4m and 6m are now below 5%.
    https://cnbc.com/bonds/

    Please see the other posting for the reason:
    https://mutualfundobserver.com/discuss/discussion/60810/dow-futures-fall-500-points-as-credit-suisse-shares-drop-more-than-20
  • edited March 2023
    @Sven, yep, I see that this morning; thanks for the link. The tide's going out, and looks like there are more than a few swimmers without swimwear.
  • @AndyJ, CDs over 5% for 1 year are still available. It was up to 5.35% yesterday and they are being snapped up quickly.
  • In the aftermath of 3 US bank failures in 4 days, there is now lot of money shifting from small local and regional banks to BIG banks. One consequence of this is that small/regional banks are forced to offer higher rates for brokered CDs. Just in case you were wondering.

    "Today [non-callable]:
    1yr CD: 5.35%
    5yr CD: 5.00%
    1yr T-bill: 4.45%
    5yr T-note: 3.78%"

    Twitter LINK
  • edited March 2023
    @Schwab, Wednesday, 1:50 pm PST:

    1yr CD: 5.4%
    1yr T-bill: 4.744%

    Note: Schwab Bank is among the offerings @5.4%, so this group may be under some pressure.

    Additional Note: @ Wednesday, 1:59 pm PST:
    Schwab & a couple of other 5.4% offerings no longer available- already subscribed? That was fast.

    Yet more: @ Wednesday, 2:09 pm PST: New listing- but not a new offering...

    HomeStreet Bank WA 4.75% CD 12/01/2023   Offered at discount: price: 99.455 / YTM: 5.543%.
    Seems like a solid vote of "no confidence" in HomeStreet Bank WA

    Yet more: @ Wednesday, 2:25 pm PST: HomeStreet Bank listing gone- somebody liked it.

  • Great! Picked up 1 yr from Barclays Bank 5.40% yesterday. Will buy more this week as they are moving quickly.
  • Schwab has far more 1 year CDs available than Fidelity. Kind of surprising
  • I’m loving the higher yields on cash. I retired six years ago, and this is the first time I’ve been able to get decent returns on cash, except for a brief period a couple years ago. As a result, I haven’t held as much in cash reserves as a retiree probably should. However, I’ve been able to load up on CDs yielding 5% and higher lately, in addition to our maximum limits on i-Bonds. When the new rates are announced for I-Bonds, I’ll decide whether to cash them out or continue holding. I’m not fooling with treasuries because the yields on CDs are higher and I’ve been laddering them so I’ve got cash available with regularity. Plus we’re keeping a healthy amount in Fidelity money markets yielding well over 4% right now. This has been a pleasant turn of events considering the total disaster bond funds have been for protecting assets.
  • Looking at Schwab just now, short-term (less than 1 year) Treasuries are running around 4.73%, and short-term (1 year) bank CDs are around 5.35%.
  • @Old_Joe

    I bought some Friday, but just couldn't pull the trigger on that Schwab CD. Schwab is selling $8 Billion worth I have read. While they are unlikely to follow SVB, they might.

    I stuck with MS, GS and JBM for a few bp less yield.

    I also bought some 3 and 6 mo Treasuries at the lower yields, figuring that if the SHTF yields will drop dramatically and I may need to sell to fund stock buys

    "May you live in interesting times"

Sign In or Register to comment.