Category Archive 'T-bills'

This week’s T-bill auction results – I got schooled


Following up on my post of a few days ago, in which I wrote that I’d decided not to invest in the 4- and 13-week T-bill auctions this week, I present the results of yesterday’s and today’s auctions:

13-week T-bill (auction date: 8/20/2007): APY = 2.95%
4-week T-bill (auction date: 8/21/2007): APY = 4.96%

What’s perplexing is that the Daily Treasury Yield Curve for the 4-week bill dipped to 2.47% (!) just yesterday, August 20, 2007.

I was feeling good about my decision yesterday, but I was really surprised today.

I guess I’ve learned my lesson: for the 4-week T-bill, I might as well stick to laddering. I only lock up my money for a month’s time, and it seems the yield curve is not necessarily a good predictor of results.

Suspending my investment in 4- and 13-week T-bills next week


T-bill yields have taken a big hit in the last couple of days. On Thursday, .

Below is a table I pulled from the showing daily yield curve rates for 4-week through 30-year Treasuries:

I’ve been continuing my laddering and buying 4- and 13-week treasuries on a recurring basis for several weeks now since, being a resident of California, I benefit from T-bills’ nice feature of being exempt from state income taxes.

But if the current yield is any indicator of upcoming auction results next week, the 9.6% tax shield on interest that I get is no longer a sufficient enough benefit to overcome the big drop in rates, especially when taxable money market funds and CDs are yielding around 5%.

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Update on T-bill rates


It’s been a while since I updated my T-bill APR chart. Here it is with the latest data from the :

This week’s T-bill APYs came in at the following:

  1. 28-day: 5.10%
  2. 91-day: 5.21%
  3. 182-day: 5.21%

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Weekly T-bill update


Not much new to report this week: T-bill rates stayed close to unchanged from last week’s auction. Below is the updated graph of Investment Rates for each T-bill (click to enlarge):

Again, the data for this chart of T-bill APRs is pulled each week from the , in case you’re curious.

T-bills take a plunge


T-bill rates took an unexpected dive this week. Even the , which showed a slight drop on Monday (the day before the auction) of 8 basis points for the 28-day bill didn’t foreshadow the 28-day APY’s drop from 5.39% last week to 4.95% this week. The 91- and 128-day bills also declined, though not as dramatically. Here’s the updated graph of Investment Rates for each T-bill (click to enlarge):

I pull the data for the chart each week from the official TreasuryDirect auction results page. Note again that the chart graphs APR, not APY.

I don’t have a solid explanation for why the 1-month rate dropped by so much. There’s been speculation that the Fed will cut interest rates next year, but I wouldn’t have guessed that the rate for the next month’s period would be affected as dramatically. There hasn’t been much speculation over at the Fatwallet thread on Treasuries (always a good thread to check for info and updates) on possible reasons. Anyone have other ideas on what’s going on?

I’ve been laddering my 28-day investments using the automatic reinvestment option on Treasury Direct, so about 1/4 of my total investment in 28-day T-bills will be affected by the new rate. The tax-effective yield on it is still a solid 5.65% and higher than I can get elsewhere, but obviously much lower than the 6.16% from last week.

If the trend continues, I might have to reevaluate my automatic reinvestments and determine whether getting in on the 3- and 6-month T-bills would be a better choice before the Fed makes any further comments.