Treasury bond pricing

Discussion of the Bond portion of the Permanent Portfolio

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Lonestar
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Treasury bond pricing

Post by Lonestar » Thu Feb 23, 2023 10:42 am

Why are treasuries priced in $100 increments i.e. 99.730 but sold in $1000 increments? Seems like a bond in this example would be priced at $997.30. I'm sure there is a simple, obvious reason.
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Re: Treasury bond pricing

Post by coasting » Thu Feb 23, 2023 9:13 pm

Lonestar wrote:
Thu Feb 23, 2023 10:42 am
Why are treasuries priced in $100 increments i.e. 99.730 but sold in $1000 increments? Seems like a bond in this example would be priced at $997.30. I'm sure there is a simple, obvious reason.
Per Investopedia at https://www.investopedia.com/terms/b/bondquote.asp
"A bond quote is the last price at which a bond traded, expressed as a percentage of par value and converted to a point scale. Par value is generally set at 100, representing 100% of a bond's face value of $1,000. For example, if a corporate bond is quoted at 99, that means it is trading at 99% of face value. In this case, the cost to buy each bond is $990."

Note, while Treasurys are sold in $1000 increments at brokers, you can actually buy as little as $100 in $100 increments via TreasuryDirect. Of course then you cannot sell unless you first transfer to a broker. So probably best to avoid unless absolutely positive will hold to maturity - maybe OK for short durations like T-Bills. See https://www.treasurydirect.gov/marketab ... ury-bills/
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Lonestar
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Re: Treasury bond pricing

Post by Lonestar » Fri Feb 24, 2023 11:24 am

OK, thanks, makes sense. I have no idea why they do it that way, considering the percent and dollar amounts really equate to the same, but I'm sure there is a good reason. I've never used Treasury Direct and was not aware they would sell in $100 increments. Brokerages sell secondary market and auction in 1K increments only as far as I know.
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Re: Treasury bond pricing

Post by welderwannabe » Sat Feb 25, 2023 7:46 am

Lonestar wrote:
Fri Feb 24, 2023 11:24 am
OK, thanks, makes sense. I have no idea why they do it that way, considering the percent and dollar amounts really equate to the same, but I'm sure there is a good reason. I've never used Treasury Direct and was not aware they would sell in $100 increments. Brokerages sell secondary market and auction in 1K increments only as far as I know.
It wasn't that long ago you had to buy in $10,000 increments at most brokerages.
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Re: Treasury bond pricing

Post by dualstow » Sat Feb 25, 2023 8:50 am

And fractions (32nds!) instead of decimals.
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Re: Treasury bond pricing

Post by vnatale » Sun Feb 26, 2023 9:16 am

Would even declinests agree that this is one area of the world where things have improved?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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