Negative 1 and 3 Month Treasury Rates

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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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Re: Negative 1 and 3 Month Treasury Rates

Post by Libertarian666 » 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

Libertarian666 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.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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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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Re: Negative 1 and 3 Month Treasury Rates

Post by Libertarian666 » Wed Mar 25, 2020 4:49 pm

vnatale wrote:
Wed Mar 25, 2020 4:26 pm
Libertarian666 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

Libertarian666 wrote:
Wed Mar 25, 2020 4:49 pm
vnatale wrote:
Wed Mar 25, 2020 4:26 pm
Libertarian666 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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Re: Negative 1 and 3 Month Treasury Rates

Post by Libertarian666 » Wed Mar 25, 2020 6:31 pm

Maddy wrote:
Wed Mar 25, 2020 6:30 pm
Libertarian666 wrote:
Wed Mar 25, 2020 4:49 pm
vnatale wrote:
Wed Mar 25, 2020 4:26 pm
Libertarian666 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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Re: Negative 1 and 3 Month Treasury Rates

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

Libertarian666 wrote:
Wed Mar 25, 2020 6:31 pm
Maddy wrote:
Wed Mar 25, 2020 6:30 pm
Libertarian666 wrote:
Wed Mar 25, 2020 4:49 pm
vnatale wrote:
Wed Mar 25, 2020 4:26 pm
Libertarian666 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.
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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
Libertarian666 wrote:
Wed Mar 25, 2020 4:49 pm
vnatale wrote:
Wed Mar 25, 2020 4:26 pm
Libertarian666 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
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats."
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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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Re: Negative 1 and 3 Month Treasury Rates

Post by ochotona » Thu Mar 26, 2020 7:27 am

jalanlong wrote:
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.
Yes but they don't pile up paper currency on your behalf. It's going to be in Money Market assets not Treasuries, not FDIC bank deposits, and they keep the interest... Like Schwab.
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Re: Negative 1 and 3 Month Treasury Rates

Post by jalanlong » Thu Mar 26, 2020 8:00 am

ochotona wrote:
Thu Mar 26, 2020 7:27 am
jalanlong wrote:
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.
Yes but they don't pile up paper currency on your behalf. It's going to be in Money Market assets not Treasuries, not FDIC bank deposits, and they keep the interest... Like Schwab.
What do I care what they are doing with my uninvested funds? Of course they could fail, that is a risk. My thoughts are that if I put $100 in an ETF like Bill or GBIL, I may very likely end up with $99 at the end of the month or year with negative short term rates. But my $100 uninvested is still $100 assuming the brokerage doesn't fail and SIPC insurance cannot cover it.
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Re: Negative 1 and 3 Month Treasury Rates

Post by pugchief » Thu Mar 26, 2020 8:23 am

jalanlong wrote:
Thu Mar 26, 2020 8:00 am
ochotona wrote:
Thu Mar 26, 2020 7:27 am
jalanlong wrote:
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.
Yes but they don't pile up paper currency on your behalf. It's going to be in Money Market assets not Treasuries, not FDIC bank deposits, and they keep the interest... Like Schwab.
What do I care what they are doing with my uninvested funds? Of course they could fail, that is a risk. My thoughts are that if I put $100 in an ETF like Bill or GBIL, I may very likely end up with $99 at the end of the month or year with negative short term rates. But my $100 uninvested is still $100 assuming the brokerage doesn't fail and SIPC insurance cannot cover it.
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
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Re: Negative 1 and 3 Month Treasury Rates

Post by ochotona » Thu Mar 26, 2020 8:31 am

pugchief wrote:
Thu Mar 26, 2020 8:23 am
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
Seconded. I got caught up in this debacle at Schwab in 2008. It was promoted as a safe, cash-like alternative. I even wrote checks off of it! Wow, did I feel brilliant. Until I got stabbed.

As you might have heard, the largest bond fund at Charles Schwab (Nasdaq: SCHW), YieldPlus, is plunging in price. Suffering from massive redemptions, of the vast majority of its assets, it was forced to sell illiquid mortgage-backed securities at distressed fire-sale prices. As a result, the fund cratered from $8.79 at the end of February to $7.17 at the end of March - a fall of more than 18% in one month - and is now trading at just $6.85. That's a really nasty year-to-date loss of 24% for an ultrashort bond fund which opened the year at $9.01 a share.
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Re: Negative 1 and 3 Month Treasury Rates

Post by Libertarian666 » Thu Mar 26, 2020 8:47 am

ochotona wrote:
Thu Mar 26, 2020 8:31 am
pugchief wrote:
Thu Mar 26, 2020 8:23 am
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
Seconded. I got caught up in this debacle at Schwab in 2008. It was promoted as a safe, cash-like alternative. I even wrote checks off of it! Wow, did I feel brilliant. Until I got stabbed.

As you might have heard, the largest bond fund at Charles Schwab (Nasdaq: SCHW), YieldPlus, is plunging in price. Suffering from massive redemptions, of the vast majority of its assets, it was forced to sell illiquid mortgage-backed securities at distressed fire-sale prices. As a result, the fund cratered from $8.79 at the end of February to $7.17 at the end of March - a fall of more than 18% in one month - and is now trading at just $6.85. That's a really nasty year-to-date loss of 24% for an ultrashort bond fund which opened the year at $9.01 a share.
I assume that is from 2008?
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Re: Negative 1 and 3 Month Treasury Rates

Post by jalanlong » Thu Mar 26, 2020 8:49 am

ochotona wrote:
Thu Mar 26, 2020 8:31 am
pugchief wrote:
Thu Mar 26, 2020 8:23 am
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
Seconded. I got caught up in this debacle at Schwab in 2008. It was promoted as a safe, cash-like alternative. I even wrote checks off of it! Wow, did I feel brilliant. Until I got stabbed.
So you think that the risk of a broker failing is worth losing money on negative interest rates? M1 does not have a MM fund so I would have to use a treasury ETF. Right now I am using GBIL which is a cheaper version of SHV.
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Re: Negative 1 and 3 Month Treasury Rates

Post by Libertarian666 » Thu Mar 26, 2020 8:50 am

jalanlong wrote:
Thu Mar 26, 2020 8:49 am
ochotona wrote:
Thu Mar 26, 2020 8:31 am
pugchief wrote:
Thu Mar 26, 2020 8:23 am
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
Seconded. I got caught up in this debacle at Schwab in 2008. It was promoted as a safe, cash-like alternative. I even wrote checks off of it! Wow, did I feel brilliant. Until I got stabbed.
So you think that the risk of a broker failing is worth losing money on negative interest rates? M1 does not have a MM fund so I would have to use a treasury ETF. Right now I am using GBIL which is a cheaper version of SHV.
How much money are we talking about? Hundreds, thousands, tens of thousands?
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Re: Negative 1 and 3 Month Treasury Rates

Post by pugchief » Thu Mar 26, 2020 8:53 am

jalanlong wrote:
Thu Mar 26, 2020 8:49 am
ochotona wrote:
Thu Mar 26, 2020 8:31 am
pugchief wrote:
Thu Mar 26, 2020 8:23 am
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
Seconded. I got caught up in this debacle at Schwab in 2008. It was promoted as a safe, cash-like alternative. I even wrote checks off of it! Wow, did I feel brilliant. Until I got stabbed.
So you think that the risk of a broker failing is worth losing money on negative interest rates? M1 does not have a MM fund so I would have to use a treasury ETF. Right now I am using GBIL which is a cheaper version of SHV.
Or withdraw the idle cash and park it in an FDIC insured account that you control at an A+ rated bank. It doesn't have to pay interest, a checking account is fine as long as the bank is healthy. YMMV
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Re: Negative 1 and 3 Month Treasury Rates

Post by ochotona » Thu Mar 26, 2020 8:59 am

Jalanlong have you bought I-Bonds this year yet?

https://www.treasurydirect.gov/indiv/re ... ibonds.htm
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Re: Negative 1 and 3 Month Treasury Rates

Post by jhogue » Thu Mar 26, 2020 10:51 am

Now would be a great time to start an I-bond ladder.

The yield on the I-bond will be 2.22% until 1 May 2020.

Get 'em while they are red-hot!
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A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Negative 1 and 3 Month Treasury Rates

Post by mathjak107 » Sat Apr 04, 2020 4:45 am

pugchief wrote:
Thu Mar 26, 2020 8:23 am
jalanlong wrote:
Thu Mar 26, 2020 8:00 am
ochotona wrote:
Thu Mar 26, 2020 7:27 am
jalanlong wrote:
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.
Yes but they don't pile up paper currency on your behalf. It's going to be in Money Market assets not Treasuries, not FDIC bank deposits, and they keep the interest... Like Schwab.
What do I care what they are doing with my uninvested funds? Of course they could fail, that is a risk. My thoughts are that if I put $100 in an ETF like Bill or GBIL, I may very likely end up with $99 at the end of the month or year with negative short term rates. But my $100 uninvested is still $100 assuming the brokerage doesn't fail and SIPC insurance cannot cover it.
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
i had reserve fund ..we lost 3% if i remember but it was locked for months. i luckily only had 35 bucks in it .
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Re: Negative 1 and 3 Month Treasury Rates

Post by whatchamacallit » Wed Mar 31, 2021 8:39 pm

1 month rate is begging to go negative again soon but this time without the initial virus fear.

https://www.treasury.gov/resource-cente ... data=yield

We started the year at .09. The last two weeks it has been bouncing between .02 and .01.
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Re: Negative 1 and 3 Month Treasury Rates

Post by mathjak107 » Fri Apr 02, 2021 5:56 am

Fund families are keeping the money markets positive by waiving expenses ....you may be better off in them then say something like bil
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