Negative 1 and 3 Month Treasury Rates

Discussion of the Cash portion of the Permanent Portfolio

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jalanlong
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Negative 1 and 3 Month Treasury Rates

Post by jalanlong » Wed Mar 25, 2020 11:23 am

https://www.cnbc.com/2020/03/25/negativ ... ative.html

I have my 25% cash position in the GBill Etf which is pretty much the same as SHV. If rates stay negative, what effect would that have on those ETFS that own treasuries of under a year? I assume they would slowly lose value. If that is the case am I better off keeping my cash under the mattress or in a non-interest bearing account or should I move to a slightly longer duration like SHY which is 1-3 year Treasuries?
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technovelist
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Re: Negative 1 and 3 Month Treasury Rates

Post by technovelist » Wed Mar 25, 2020 4:23 pm

jalanlong wrote:
Wed Mar 25, 2020 11:23 am
https://www.cnbc.com/2020/03/25/negativ ... ative.html

I have my 25% cash position in the GBill Etf which is pretty much the same as SHV. If rates stay negative, what effect would that have on those ETFS that own treasuries of under a year? I assume they would slowly lose value. If that is the case am I better off keeping my cash under the mattress or in a non-interest bearing account or should I move to a slightly longer duration like SHY which is 1-3 year Treasuries?
I'm not sure that would help. I expect them all to be negative pretty soon.

As a data point, my one-month T-bill at Fidelity is at 100%.
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Re: Negative 1 and 3 Month Treasury Rates

Post by vnatale » Wed Mar 25, 2020 4:26 pm

technovelist wrote:
Wed Mar 25, 2020 4:23 pm
jalanlong wrote:
Wed Mar 25, 2020 11:23 am
https://www.cnbc.com/2020/03/25/negativ ... ative.html

I have my 25% cash position in the GBill Etf which is pretty much the same as SHV. If rates stay negative, what effect would that have on those ETFS that own treasuries of under a year? I assume they would slowly lose value. If that is the case am I better off keeping my cash under the mattress or in a non-interest bearing account or should I move to a slightly longer duration like SHY which is 1-3 year Treasuries?
I'm not sure that would help. I expect them all to be negative pretty soon.

As a data point, my one-month T-bill at Fidelity is at 100%.
However, some of us share the belief that having a negative return is not the end of the world. We view it as the "insurance premium" we are paying to hold Treasury bills. No different than the normal reduced return we accept to hold Treasury Bills.

Vinny
Last edited by vnatale on Wed Mar 25, 2020 5:00 pm, edited 1 time in total.
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Kriegsspiel
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Re: Negative 1 and 3 Month Treasury Rates

Post by Kriegsspiel » Wed Mar 25, 2020 4:37 pm

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technovelist
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Re: Negative 1 and 3 Month Treasury Rates

Post by technovelist » Wed Mar 25, 2020 4:49 pm

vnatale wrote:
Wed Mar 25, 2020 4:26 pm
technovelist wrote:
Wed Mar 25, 2020 4:23 pm
jalanlong wrote:
Wed Mar 25, 2020 11:23 am
https://www.cnbc.com/2020/03/25/negativ ... ative.html

I have my 25% cash position in the GBill Etf which is pretty much the same as SHV. If rates stay negative, what effect would that have on those ETFS that own treasuries of under a year? I assume they would slowly lose value. If that is the case am I better off keeping my cash under the mattress or in a non-interest bearing account or should I move to a slightly longer duration like SHY which is 1-3 year Treasuries?
I'm not sure that would help. I expect them all to be negative pretty soon.

As a data point, my one-month T-bill at Fidelity is at 100%.
However, some of us share the belief that having a negative return is not the end of the world. We view it as the "insurance premium" was are paying to hold Treasury bills. No different than the normal reduced return we accept to hold Treasury Bills.

Vinny
Absolutely. Or the negative return on gold if you include expenses.
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Re: Negative 1 and 3 Month Treasury Rates

Post by Maddy » Wed Mar 25, 2020 6:30 pm

technovelist wrote:
Wed Mar 25, 2020 4:49 pm
vnatale wrote:
Wed Mar 25, 2020 4:26 pm
technovelist wrote:
Wed Mar 25, 2020 4:23 pm
jalanlong wrote:
Wed Mar 25, 2020 11:23 am
https://www.cnbc.com/2020/03/25/negativ ... ative.html

I have my 25% cash position in the GBill Etf which is pretty much the same as SHV. If rates stay negative, what effect would that have on those ETFS that own treasuries of under a year? I assume they would slowly lose value. If that is the case am I better off keeping my cash under the mattress or in a non-interest bearing account or should I move to a slightly longer duration like SHY which is 1-3 year Treasuries?
I'm not sure that would help. I expect them all to be negative pretty soon.

As a data point, my one-month T-bill at Fidelity is at 100%.
However, some of us share the belief that having a negative return is not the end of the world. We view it as the "insurance premium" was are paying to hold Treasury bills. No different than the normal reduced return we accept to hold Treasury Bills.

Vinny
Absolutely. Or the negative return on gold if you include expenses.
And this is better than holding green cash why?
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technovelist
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Re: Negative 1 and 3 Month Treasury Rates

Post by technovelist » Wed Mar 25, 2020 6:31 pm

Maddy wrote:
Wed Mar 25, 2020 6:30 pm
technovelist wrote:
Wed Mar 25, 2020 4:49 pm
vnatale wrote:
Wed Mar 25, 2020 4:26 pm
technovelist wrote:
Wed Mar 25, 2020 4:23 pm
jalanlong wrote:
Wed Mar 25, 2020 11:23 am
https://www.cnbc.com/2020/03/25/negativ ... ative.html

I have my 25% cash position in the GBill Etf which is pretty much the same as SHV. If rates stay negative, what effect would that have on those ETFS that own treasuries of under a year? I assume they would slowly lose value. If that is the case am I better off keeping my cash under the mattress or in a non-interest bearing account or should I move to a slightly longer duration like SHY which is 1-3 year Treasuries?
I'm not sure that would help. I expect them all to be negative pretty soon.

As a data point, my one-month T-bill at Fidelity is at 100%.
However, some of us share the belief that having a negative return is not the end of the world. We view it as the "insurance premium" was are paying to hold Treasury bills. No different than the normal reduced return we accept to hold Treasury Bills.

Vinny
Absolutely. Or the negative return on gold if you include expenses.
And this is better than holding green cash why?
The mattress gets too lumpy. ;)
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Kriegsspiel
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Re: Negative 1 and 3 Month Treasury Rates

Post by Kriegsspiel » Wed Mar 25, 2020 6:34 pm

technovelist wrote:
Wed Mar 25, 2020 6:31 pm
Maddy wrote:
Wed Mar 25, 2020 6:30 pm
technovelist wrote:
Wed Mar 25, 2020 4:49 pm
vnatale wrote:
Wed Mar 25, 2020 4:26 pm
technovelist wrote:
Wed Mar 25, 2020 4:23 pm
jalanlong wrote:
Wed Mar 25, 2020 11:23 am
https://www.cnbc.com/2020/03/25/negativ ... ative.html

I have my 25% cash position in the GBill Etf which is pretty much the same as SHV. If rates stay negative, what effect would that have on those ETFS that own treasuries of under a year? I assume they would slowly lose value. If that is the case am I better off keeping my cash under the mattress or in a non-interest bearing account or should I move to a slightly longer duration like SHY which is 1-3 year Treasuries?
I'm not sure that would help. I expect them all to be negative pretty soon.

As a data point, my one-month T-bill at Fidelity is at 100%.
However, some of us share the belief that having a negative return is not the end of the world. We view it as the "insurance premium" was are paying to hold Treasury bills. No different than the normal reduced return we accept to hold Treasury Bills.

Vinny
Absolutely. Or the negative return on gold if you include expenses.
And this is better than holding green cash why?
The mattress gets too lumpy. ;)
Go memory foam, with a slat frame. You can just duct tape stacks onto the slats. It raises the bed up a bit too, if you're not into that Scandi aesthetic.
All of humanity’s problems with coronavirus stem from a man’s inability to sit quietly in a room alone.
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vnatale
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Re: Negative 1 and 3 Month Treasury Rates

Post by vnatale » Wed Mar 25, 2020 6:39 pm

Maddy wrote:
Wed Mar 25, 2020 6:30 pm
technovelist wrote:
Wed Mar 25, 2020 4:49 pm
vnatale wrote:
Wed Mar 25, 2020 4:26 pm
technovelist wrote:
Wed Mar 25, 2020 4:23 pm
jalanlong wrote:
Wed Mar 25, 2020 11:23 am
https://www.cnbc.com/2020/03/25/negativ ... ative.html

I have my 25% cash position in the GBill Etf which is pretty much the same as SHV. If rates stay negative, what effect would that have on those ETFS that own treasuries of under a year? I assume they would slowly lose value. If that is the case am I better off keeping my cash under the mattress or in a non-interest bearing account or should I move to a slightly longer duration like SHY which is 1-3 year Treasuries?
I'm not sure that would help. I expect them all to be negative pretty soon.

As a data point, my one-month T-bill at Fidelity is at 100%.
However, some of us share the belief that having a negative return is not the end of the world. We view it as the "insurance premium" was are paying to hold Treasury bills. No different than the normal reduced return we accept to hold Treasury Bills.

Vinny
Absolutely. Or the negative return on gold if you include expenses.
And this is better than holding green cash why?
Good question. Made me pause. But if you have $10,000 or $50,000 in the house and your house has a fire, there goes you cash investment. Plus, when I finally do buy the Treasury Bills I'll be buying weekly ones so my performance will most match a Treasury Bill money market fund. And, when rates go up, the return will go up. Unlike cash.

I'm actually highly paranoid holding cash. I collect all the money from our basketball players - usually $1,000 twice a year. Never bring it to the bank. Hide it in my house. I'll never spend it. So, I guess I'm somewhat doing what others advocate here.

Vinny
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jalanlong
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Re: Negative 1 and 3 Month Treasury Rates

Post by jalanlong » Wed Mar 25, 2020 7:29 pm

Right now I own 4 ETFs for the 4 PP assets. If Tbill rates stay negative I could just keep that 25% in cash in the brokerage account uninvested. It would earn .01% probably. Better than negative I guess.
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Re: Negative 1 and 3 Month Treasury Rates

Post by Tortoise » Wed Mar 25, 2020 8:28 pm

jalanlong wrote:
Wed Mar 25, 2020 7:29 pm
If Tbill rates stay negative I could just keep that 25% in cash in the brokerage account uninvested.
By “uninvested,” you mean invested in your brokerage account’s settlement fund, which I believe is generally some kind of money market fund. Might want to look under that hood.
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Re: Negative 1 and 3 Month Treasury Rates

Post by jalanlong » Wed Mar 25, 2020 8:52 pm

Tortoise wrote:
Wed Mar 25, 2020 8:28 pm
jalanlong wrote:
Wed Mar 25, 2020 7:29 pm
If Tbill rates stay negative I could just keep that 25% in cash in the brokerage account uninvested.
By “uninvested,” you mean invested in your brokerage account’s settlement fund, which I believe is generally some kind of money market fund. Might want to look under that hood.
I don’t believe so. I use M1 Finance as my broker. Any uninvested cash just sits in the account. I looked and it offers no interest. I don’t believe they sweep cash to any fund.
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