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Re: Negative 1 and 3 Month Treasury Rates
Posted: Wed Apr 07, 2021 5:03 pm
by jhogue
The HBPP prescribes a Treasury money market fund for safety and liquidity, not yield. Chasing yield in cash is not necessary and can potentially lead to problems with safety and liquidity at the moment that you can least afford it.
BTW, the nominal yield of a 1 year Treasury zero stands at -0.01% today. Real yields of STTs have been negative for some time now. I note, in passing, that low Treasury yields have not stopped Warrant Buffet from piling up his stash of Treasurys estimated at more than $100 billion. He does not hold high-yield bonds, muni bonds, bank-sponsored repos, or currency swaps. Do you wonder why that is?
Re: Negative 1 and 3 Month Treasury Rates
Posted: Wed Apr 07, 2021 5:04 pm
by mathjak107
They both are treasuries only one is loosing money in the etf as no expenses seem to be waived
Re: Negative 1 and 3 Month Treasury Rates
Posted: Wed Apr 21, 2021 3:33 pm
by whatchamacallit
Re: Negative 1 and 3 Month Treasury Rates
Posted: Wed Apr 21, 2021 6:29 pm
by I Shrugged
jhogue wrote: ↑Wed Apr 07, 2021 5:03 pm
The HBPP prescribes a Treasury money market fund for safety and liquidity, not yield. Chasing yield in cash is not necessary and can potentially lead to problems with safety and liquidity at the moment that you can least afford it.
BTW, the nominal yield of a 1 year Treasury zero stands at -0.01% today. Real yields of STTs have been negative for some time now. I note, in passing, that low Treasury yields have not stopped Warrant Buffet from piling up his stash of Treasurys estimated at more than $100 billion. He does not hold high-yield bonds, muni bonds, bank-sponsored repos, or currency swaps. Do you wonder why that is?
I do.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Wed Apr 21, 2021 7:32 pm
by jhogue
I think it is quite simple: Buffett is more concerned with the return of his money than he is with the return on his money. In other words, safety and liquidity must come before yield.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Fri Apr 23, 2021 5:56 pm
by mathjak107
jhogue wrote: ↑Wed Apr 21, 2021 7:32 pm
I think it is quite simple: Buffett is more concerned with the return of his money than he is with the return on his money. In other words, safety and liquidity must come before yield.
He made so many poor buys and subsequent sales you have to wonder if that is true...he has underperformed a simple S&P fund for 15 years which gas no individual company risk either
Re: Negative 1 and 3 Month Treasury Rates
Posted: Thu Apr 29, 2021 5:56 pm
by whatchamacallit
https://www.treasury.gov/resource-cente ... data=yield
1, 2 and 3 month all .01 last two days. Closer and closer to 0.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Thu Apr 29, 2021 11:50 pm
by Don
mathjak107 wrote: ↑Fri Apr 23, 2021 5:56 pm
jhogue wrote: ↑Wed Apr 21, 2021 7:32 pm
I think it is quite simple: Buffett is more concerned with the return of his money than he is with the return on his money. In other words, safety and liquidity must come before yield.
He made so many poor buys and subsequent sales you have to wonder if that is true...he has underperformed a simple S&P fund for 15 years which gas no individual company risk either
He's been doing well recently and overperforming
Re: Negative 1 and 3 Month Treasury Rates
Posted: Fri Apr 30, 2021 2:44 am
by mathjak107
It only took him 15 years to get lucky again
Re: Negative 1 and 3 Month Treasury Rates
Posted: Fri May 21, 2021 10:53 am
by whatchamacallit
Very slowly churning lower.
Appears 1 month did go negative for moment today.
https://www.marketwatch.com/investing/b ... trycode=bx
Re: Negative 1 and 3 Month Treasury Rates
Posted: Fri May 21, 2021 12:39 pm
by whatchamacallit
1 month bill is staying negative and I bet it will close negative today.
I can't imagine a treasury money market fund won't start passing this along to fund holders now.
Do they have method in place to not break the buck?
Re: Negative 1 and 3 Month Treasury Rates
Posted: Fri May 21, 2021 1:59 pm
by Tortoise
Maybe they'll close the fund to new investors to limit the number of new T-bill purchases, hold the NAV at $1, and increase the fund's ER to offset the negative rate?
Re: Negative 1 and 3 Month Treasury Rates
Posted: Fri May 21, 2021 2:48 pm
by sophie
I don't know how Fidelity is doing it, but they still have no minimum to invest, are still open to new investors, and haven't broken the buck.
My guess is that they are able to compensate for the zero or negative 1 month bills by holding some assets in longer-durations. They probably also have auto purchasing software that tries to maximize yield.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Fri May 21, 2021 3:06 pm
by Kriegsspiel
I wonder how much the people at these financial companies hate all the diamondhands holding these no-yield funds. I can't imagine they enjoy having to do all these machinations for such a low-prestige result.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Fri May 21, 2021 4:24 pm
by jhogue
The most recent monthly fact sheet for FDLXX (4/30/21) shows that without waiving expenses and reimbursements, the fund would actually have a 7 day yield of -0.35%. Since the fund managers manage a number of Fidelity money market funds, it is possible that the company’s net cost to run this particular money market fund is close to zero. If they were actually losing money on their operations—and before they broke the buck—I think that they would probably return investors’ shares and shut the fund down.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Sat May 22, 2021 10:30 pm
by whatchamacallit
Fed’s Tools Showing Signs of Stress Against the Cash Onslaught
https://www.bloomberg.com/news/articles ... -onslaught
The longer the rate on the Fed’s facility remains at zero, money markets will either need to close funds to new or existing investors or offer zero or negative return to investors, he said.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Sun May 23, 2021 4:12 am
by Tortoise
Re: Negative 1 and 3 Month Treasury Rates
Posted: Wed May 26, 2021 12:00 pm
by jhogue
The yield for the one year U.S. Treasury Zero fell to -0.03%.
The entire short end of Treasury yield curve is now in negative territory from 3 months out to 1 year.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Wed May 26, 2021 1:09 pm
by Kriegsspiel
Just transferred $10,000 of Treasuries to I Bonds. Feels good.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Wed May 26, 2021 6:37 pm
by jhogue
IIRC, didn't you keep Treasurys on auto-roll? Once upon a time, they seemed like the better choice.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Wed May 26, 2021 7:35 pm
by Kriegsspiel
Yea I was auto-rolling 4 week Treasuries at TreasuryDirect back in the day. I was also doing my own ladder with individual bills for the longest time.
Right now I am using a 1-3 year Treasury fund, I Bonds, and a pinch of the G fund. Well, and a small amount of EE Bonds that my grandparents bought me in the early 2000s.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Thu May 27, 2021 1:29 pm
by jhogue
kriegsspiel, you have a unique (and all Treasury!) composition of Cash:
-I had 1 year Treasurys on auto-roll myself, but let them all mature over the last two years. They work best in declining interest rate environment.
-I have a friend who uses G fund as his principal cash reserve. Good yield now, but I don't think you can buy it unless you are a fed employee.
-I also have a small quota of EE bonds left, but probably won't be buying any more at my age.
-As long as inflation worries prevail, I bonds seem to be the best buy going forward, and might even yield a positive real return after inflation and taxes.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Thu May 27, 2021 2:54 pm
by jswinner
This weeks 8 week bill was filled at $99.9992. FIDO has basically stopped autoroll I think because when you purchase, you are required to click through a bunch of negative yield disclaimers. So I just purchase these weekly with manual entries.. So far, none have actually gone negative.
Re: Negative 1 and 3 Month Treasury Rates
Posted: Fri Jun 18, 2021 5:08 pm
by whatchamacallit
I was wondering why 1 month rate went up.
Fed Repo market now paying .05 instead of 0.
https://youtu.be/zO9blwFHrv8
https://www.reuters.com/article/usa-fed ... SL2N2NZ23Y
Re: Negative 1 and 3 Month Treasury Rates
Posted: Wed Jul 28, 2021 10:15 pm
by whatchamacallit
I noticed 1 month was starting to go below reverse repo .5 rate.
They now have new tool to keep them above .25 for now.
https://www.newyorkfed.org/markets/opol ... icy_210728
The way I see it, we would be negative and breaking the buck for sure without these backstops.
