Treasurys for Sale

Discussion of the Bond portion of the Permanent Portfolio

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Kbg
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Re: Treasurys for Sale

Post by Kbg » Tue Nov 26, 2019 10:58 am

I wouldn’t worry anymore than you would worry about a spread when selling an ETF.
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dualstow
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Re: Treasurys for Sale

Post by dualstow » Tue Nov 26, 2019 11:50 am

Kbg wrote:
Tue Nov 26, 2019 10:58 am
I wouldn’t worry anymore than you would worry about a spread when selling an ETF.
😱 When selling a what now?

Just kidding.
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Kbg
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Re: Treasurys for Sale

Post by Kbg » Tue Nov 26, 2019 12:51 pm

LOL
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Kriegsspiel
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Re: Treasurys for Sale

Post by Kriegsspiel » Tue Nov 26, 2019 5:04 pm

dualstow wrote:
Tue Nov 26, 2019 9:01 am
which says there's no bid-ask spread for buying in the primary market (yup)

but nothing about selling a bond before maturity that was bought at auction vs one that was already used when you bought it.

Well, I'm not going to worry about it.
Since KGB wasn't very helpful, I'll offer a wild guess! I wonder if Vanguard uses a wider spread to get a bond from the primary purchaser into the secondary market to recoup higher associated costs. Then when they broker secondary market trades, their spread is smaller. That's how they make money without charging commission.
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Re: Treasurys for Sale

Post by dualstow » Tue Nov 26, 2019 5:16 pm

hmm, makes sense.Maybe that’s it.
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Kbg
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Re: Treasurys for Sale

Post by Kbg » Tue Nov 26, 2019 5:59 pm

Details of how this is done at your brokerage should be available from them via a disclosure. It may take some digging.
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Re: Treasurys for Sale

Post by Kbg » Tue Nov 26, 2019 6:03 pm

Details of how this is done at your brokerage should be available from them via a disclosure. Finding it may take some digging.

The main point to all of this is that bonds also have bid/ask spreads just like stocks, ETFs, futures, options etc. Some brokerages are more transparent about it.
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Re: Treasurys for Sale

Post by Tortoise » Wed Nov 27, 2019 3:26 pm

On the secondary market, I’ve noticed that sometimes smaller trades or odd-sized trades have higher spreads than the large trades involving nice, round numbers. Whereas at auction, I believe the size of your purchase makes no difference.

But for a PP investor who is trading bonds only a couple of times a year at the most, the secondary market spreads are negligible when viewed as an annualized “expense ratio.” Lower than most Treasury ETFs, I would think.
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