Negative 1 and 3 Month Treasury Rates

[jalanlong]

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?

[Libertarian666]

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%.

[yankees60]

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

[Kriegsspiel]

[Libertarian666]

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.

[Maddy]

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?

[Libertarian666]

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.

[Kriegsspiel]

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.

[yankees60]

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

[jalanlong]

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.

[Tortoise]

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.

[jalanlong]

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.

[ochotona]

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.

[jalanlong]

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.

[ochotona]

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.

[Libertarian666]

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?

[jalanlong]

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.

[Libertarian666]

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?

[ochotona]

Jalanlong have you bought I-Bonds this year yet?

https://www.treasurydirect.gov/indiv/re ... ibonds.htm

[jhogue]

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!

[mathjak107]

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 .

[whatchamacallit]

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.

[mathjak107]

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

[jalanlong]

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

I noticed that my cash ETF GBILL hasn’t paid interest all year since the .09% expense ratio outweighs treasury bill returns at the moment. SHV hasn’t paid anything out this year either.

[mathjak107]

My fdlxx has been paying under a buck on 6 figures in cash .

But at least the fund families seem to be waiving the expenses while etfs are not