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Post by bobfl on Mar 17, 2023 23:17:48 GMT
If the treasury rates drops, how do the funds focusing on treasuries react? Thanks!
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Post by johnsmith on Mar 18, 2023 0:26:33 GMT
it's unclear what you are asking.
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Post by habsui on Mar 18, 2023 0:45:00 GMT
The treasuries that the fund is holding go up in price. True for most bonds.
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Post by FD1000 on Mar 18, 2023 4:10:53 GMT
One of the most held fund is BND=US Tot bond index, see below 5+10 YR treasury go down, BND is up. Attachments:
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Post by bobfl on Mar 18, 2023 12:38:14 GMT
One of the most held fund is BND=US Tot bond index, see below 5+10 YR treasury go down, BND is up. Thanks for the responses and chart. So, the price of the funds which hold only treasuries will quickly and directly correlate with the movement in treasuries. Treasuries go down in yield; the fund price correlates 100% and goes up. I own only individual (not funds or etfs!) corporate credit issues (bonds, in the past, and only preferreds, now.) As a whole, corporate credit adjusts with major moves in the Fed Fund rate. FFR up, credit prices down to reflect higher rates. But individually they don't always respond that way because each is individually influenced by different variables. The preferred ETFs don't always directly correlate with FFR changes on a day to day basis because there are many individual components that are individually affected by rate increases differently. But I believe you are saying that funds that deal only with treasuries will directly move with the movement in Treasuries, even though there may be uncertainty about future Treasury rates. So there is a direct real time correlation. Edited: After studying your chart again, there is not a direct 100% correlation to that fund because it is not a pure fund of treasuries. |
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Post by retiredat48 on Mar 18, 2023 15:24:19 GMT
Treasury bond funds are one of the "purest" forms of FI investing. They follow the interest rate change rule very well...as in:
If interest rates fall (or rise) by 1%, the fund will rise (or fall) by a percentage amount that equals the approx DURATION (related to maturity of underlying bonds held) of the fund.
So, a 1% drop in rates means about a 5% rise in price, for a 5 yr duration treasury bond fund.
Glad I bought VGIT (5 yr treasury) in last couple weeks!
Note: All investors in bonds/bond funds are strongly encouraged to be familiar with this interest rate rule herein in bold. (It's been so long since I recited the rule, I am probably mistating it!!&*^%$#
R48
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Post by FD1000 on Mar 18, 2023 21:56:22 GMT
One of the most held fund is BND=US Tot bond index, see below 5+10 YR treasury go down, BND is up. Thanks for the responses and chart. So, the price of the funds which hold only treasuries will quickly and directly correlate with the movement in treasuries. Treasuries go down in yield; the fund price correlates 100% and goes up. I own only individual (not funds or etfs!) corporate credit issues (bonds, in the past, and only preferreds, now.) As a whole, corporate credit adjusts with major moves in the Fed Fund rate. FFR up, credit prices down to reflect higher rates. But individually they don't always respond that way because each is individually influenced by different variables. The preferred ETFs don't always directly correlate with FFR changes on a day to day basis because there are many individual components that are individually affected by rate increases differently. But I believe you are saying that funds that deal only with treasuries will directly move with the movement in Treasuries, even though there may be uncertainty about future Treasury rates. So there is a direct real time correlation. Edited: After studying your chart again, there is not a direct 100% correlation to that fund because it is not a pure fund of treasuries. BND isn't a pure treasury fund. It has all 3 (Gov+Corp+Securitized). About 70% very high rating. the rest is IG (BBB is questionable). Treasuries react directly to rates. The further you go from it, the less unknown. ETF can be equal to a fund BND=VBTLX. Individuals are your own "problem". I don't buy them and I would only stick with a known fund since single bonds are more complicated than a fund + you can sell a fund anytime. Good chance you will pay more for a single bond than a fund with billions, why bother. Remember, there are managers that do it all day long and come short. |
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Post by bobfl on Mar 18, 2023 23:42:37 GMT
Individuals are your own "problem". I don't buy them and I would only stick with a known fund since single bonds are more complicated than a fund + you can sell a fund anytime. Good chance you will pay more for a single bond than a fund with billions, why bother. Remember, there are managers that do it all day long and come short. Funds are your own "problem". I don't buy them and I would only stick with individual issues. :-) |
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Post by johnsmith on Mar 19, 2023 4:25:29 GMT
Individuals are your own "problem". I don't buy them and I would only stick with a known fund since single bonds are more complicated than a fund + you can sell a fund anytime. Good chance you will pay more for a single bond than a fund with billions, why bother. Remember, there are managers that do it all day long and come short. Funds are your own "problem". I don't buy them and I would only stick with individual issues. :-) That is a strange response, considering your original post?
or
Was the original post tongue in cheek cheeky?
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Post by yogibearbull on Mar 19, 2023 12:58:59 GMT
I don't mind buying individual T-Bills at all. They are very simple to buy at brokerages and roll (auto or manual). No credit checks are required for Treasuries as for the individual bonds (corporates or munis). Diversification through funds is also not necessary for Treasuries - and funds cause additional issues with duration or non-maturity.
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Post by FD1000 on Mar 19, 2023 14:12:00 GMT
Let's explore:
1) Treasury fund (example: VGIT) pays monthly div, T-bills don't.
2) Trading treasury funds (example: VGIT) anytime is pretty easy, trading T-bills isn't that easy, what happens when you want to sell your T-bills prior to maturity?
3) When you buy your own T-bills, you are your own manager. That can be good or bad(example: what is the maturity date?). What happens when markets change? I also don't believe in one bond category and no one can forecast the future for years to come. If treasuries will do well in months-years to come(AKA rates go down), I rather buy a treasury fund that will pay me monthly div + get additional performance from interest rates decrease. If you are smart enough to know what maturity/duration you need/want, you are probably smart to know when to switch (example: rates are going up in 2022 = stay out, rates are starting to go down, you can select your risk/volatility and potential reward funds between months to 20+ years)
For a typical average investor, which are the majority of investors, a generic bond fund (index, or low ER managed) that includes 2+ categories is the most recommended idea I have seen/read in most/all books/articles/interviews.
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Post by bobfl on Mar 19, 2023 17:41:00 GMT
Funds are your own "problem". I don't buy them and I would only stick with individual issues. :-) That is a strange response, considering your original post?
orI
Was the original post tongue in cheek cheeky?
johnsmith, I was just giving a smartass response back to fd1000 in response to his smartass answer. There are so many ways to invest, individual equity and stocks OR funds, etc. Whatever we own are challenges. What he invests in is his problem; what I invest in is my problem. We all have to understand what we are investing in and keep an eye on it. Not sure why he even made that comment. I like individual investments because I can make a higher yield, plus I can control what I own. He apparently likes funds. So does most people because of diversification and an investor can have experts buy holdings. But they are big machines that have to buy when money comes in (except cefs which can have leverage issues). So funds can contain a lot of stuff we may not want to own as individuals and the fund specialists may not be able to dump holdings easily. Individual instruments have their own set of problems, like having to know each company well, read press releases, financial reports, etc. But that part can be fun. Bottom line, every investment is our own problem, individual instruments or funds. Nothing is easy or we would all be billionaires. About my post: treasury yields dropped lately and I was curious how fast companies who owned treasuries that marked down to market would potentially mark up to market. |
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Post by retiredat48 on Mar 19, 2023 18:18:00 GMT
bobfl ,@...who posted: "About my post: treasury yields dropped lately and I was curious how fast companies who owned treasuries that marked down to market would potentially mark up to market."---------------------------------------- Basic...for funds, immediately at days close. For ETFs...immediately during the day. Again, perhaps I don't understand the question. BTW Did I answer your initial question? R48
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Post by mozart522 on Mar 20, 2023 14:30:10 GMT
Let's explore: 1) Treasury fund (example: VGIT) pays monthly div, T-bills don't. 2) Trading treasury funds (example: VGIT) anytime is pretty easy, trading T-bills isn't that easy, what happens when you want to sell your T-bills prior to maturity? 3) When you buy your own T-bills, you are your own manager. That can be good or bad(example: what is the maturity date?). What happens when markets change? I also don't believe in one bond category and no one can forecast the future for years to come. If treasuries will do well in months-years to come(AKA rates go down), I rather buy a treasury fund that will pay me monthly div + get additional performance from interest rates decrease. If you are smart enough to know what maturity/duration you need/want, you are probably smart to know when to switch (example: rates are going up in 2022 = stay out, rates are starting to go down, you can select your risk/volatility and potential reward funds between months to 20+ years) For a typical average investor, which are the majority of investors, a generic bond fund (index, or low ER managed) that includes 2+ categories is the most recommended idea I have seen/read in most/all books/articles/interviews. Currently, I'm 75% in T-bills, all with less than 3 months to maturity and all at least 4.6%. Some are 6 month and some are in-between. Right now, I'm going with the bird in the hand. Way too many unknowns and unknown unknowns. A couple weeks ago there was a good chance of 25 bp hike, then it went to 50, now it is more looking like a pause...or not. We all have different goals, different needs, different mind-sets and different skill-sets. Anyone who wants to sell a 3 month T-bill before maturity shouldn't have bought it in the first place. As far as timing the bond market, I'm down with that WHEN the fed pivots and starts to cut. Rate cuts have to lead to higher prices. As for now, it is all speculation. I don't worry about missing out..No FOMO here. |
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Post by retiredat48 on Mar 20, 2023 15:28:03 GMT
Let's explore: 1) Treasury fund (example: VGIT) pays monthly div, T-bills don't. 2) Trading treasury funds (example: VGIT) anytime is pretty easy, trading T-bills isn't that easy, what happens when you want to sell your T-bills prior to maturity? 3) When you buy your own T-bills, you are your own manager. That can be good or bad(example: what is the maturity date?). What happens when markets change? I also don't believe in one bond category and no one can forecast the future for years to come. If treasuries will do well in months-years to come(AKA rates go down), I rather buy a treasury fund that will pay me monthly div + get additional performance from interest rates decrease. If you are smart enough to know what maturity/duration you need/want, you are probably smart to know when to switch (example: rates are going up in 2022 = stay out, rates are starting to go down, you can select your risk/volatility and potential reward funds between months to 20+ years) For a typical average investor, which are the majority of investors, a generic bond fund (index, or low ER managed) that includes 2+ categories is the most recommended idea I have seen/read in most/all books/articles/interviews. Currently, I'm 75% in T-bills, all with less than 3 months to maturity and all at least 4.6%. Some are 6 month and some are in-between. Right now, I'm going with the bird in the hand. Way too many unknowns and unknown unknowns. A couple weeks ago there was a good chance of 25 bp hike, then it went to 50, now it is more looking like a pause...or not. We all have different goals, different needs, different mind-sets and different skill-sets. Anyone who wants to sell a 3 month T-bill before maturity shouldn't have bought it in the first place. As far as timing the bond market, I'm down with that WHEN the fed pivots and starts to cut. Rate cuts have to lead to higher prices. As for now, it is all speculation. I don't worry about missing out..No FOMO here. ,...I personally have separated out that I am mostly a long term investor; and only occasionally trade treasuries such as TLT (20 yr). Further, I agree that most should be investing in treasuries for the longer haul. I have posted often, however, that I consider 4% or more on LT treasuries as an excellent fit for portfolios and asset allocations of retirees. I stated that if rates get to 4%, lock it in, as it may not last long. Long story why as to the huge demands at 4+%. This has happened right on target. Further I consider we now may not see 4+% for at least a year or two. Sorry if anyone missed out...but this is not trading or speculating. It is adding what is of value to ones portfolio. R48 |
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Post by Norbert on Mar 20, 2023 17:05:45 GMT
Looking at the 10-year T-Bond yield chart, I'm surprised to see that the recent super-quick 50 bps plunge actually isn't a big deal technically. The move stayed within recent months' trading range. Most importantly, 3.5% was not broken, that despite the scary banking news. Click to enlarge:  I'm not a gambler, but if I were forced to bet, I'd run with TBF here; not TLT. But don't quote me on that. |
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Post by Chahta on Mar 20, 2023 17:15:06 GMT
Looking at the 10-year T-Bond yield chart, I'm surprised to see that the recent super-quick 50 bps plunge actually isn't a big deal technically. The move stayed within recent months' trading range. Most importantly, 3.5% was not broken, that despite the scary banking news. Click to enlarge: View AttachmentI'm not a gambler, but if I were forced to bet, I'd run with TBF here; not TLT. But don't quote me on that. I agree. I believe the 10 year will reverse and kill the bond rally soon. |
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Post by Chahta on Mar 20, 2023 17:15:54 GMT
If the treasury rates drops, how do the funds focusing on treasuries react? Thanks! Rates go down = bonds rally. |
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Post by fishingrod on Mar 20, 2023 17:23:51 GMT
Looking at the 10-year T-Bond yield chart, I'm surprised to see that the recent super-quick 50 bps plunge actually isn't a big deal technically. The move stayed within recent months' trading range. Most importantly, 3.5% was not broken, that despite the scary banking news. Click to enlarge: View AttachmentI'm not a gambler, but if I were forced to bet, I'd run with TBF here; not TLT. But don't quote me on that. I agree. I believe the 1o year will reverse and kill the bond rally soon.
I would tend to concur. There is 3% YTD that could be captured from intermediate Treasuries. Especially shortly after the March 22nd Raise/hold. They could go up or down. Or they could stay the same  |
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Post by FD1000 on Mar 20, 2023 23:15:20 GMT
Let's explore: 1) Treasury fund (example: VGIT) pays monthly div, T-bills don't. 2) Trading treasury funds (example: VGIT) anytime is pretty easy, trading T-bills isn't that easy, what happens when you want to sell your T-bills prior to maturity? 3) When you buy your own T-bills, you are your own manager. That can be good or bad(example: what is the maturity date?). What happens when markets change? I also don't believe in one bond category and no one can forecast the future for years to come. If treasuries will do well in months-years to come(AKA rates go down), I rather buy a treasury fund that will pay me monthly div + get additional performance from interest rates decrease. If you are smart enough to know what maturity/duration you need/want, you are probably smart to know when to switch (example: rates are going up in 2022 = stay out, rates are starting to go down, you can select your risk/volatility and potential reward funds between months to 20+ years) For a typical average investor, which are the majority of investors, a generic bond fund (index, or low ER managed) that includes 2+ categories is the most recommended idea I have seen/read in most/all books/articles/interviews. Currently, I'm 75% in T-bills, all with less than 3 months to maturity and all at least 4.6%. Some are 6 month and some are in-between. Right now, I'm going with the bird in the hand. Way too many unknowns and unknown unknowns. A couple weeks ago there was a good chance of 25 bp hike, then it went to 50, now it is more looking like a pause...or not. We all have different goals, different needs, different mind-sets and different skill-sets. Anyone who wants to sell a 3 month T-bill before maturity shouldn't have bought it in the first place. As far as timing the bond market, I'm down with that WHEN the fed pivots and starts to cut. Rate cuts have to lead to higher prices. As for now, it is all speculation. I don't worry about missing out..No FOMO here. +1 I'm at 99+% in MM. I just switched today from prime MM to treasury MM, just in case something may happen. The difference between the two MM is about 0.2% and worth for me the piece of mind without any possible limitations. As usual, MM let me trade as I did recently until I see a market I can understand. The Fed is going to blink and bonds will do nicely, it's just a matter of time. "I don't worry about missing out": that actually made me a better trader since retirement. |
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Post by richardsok on Mar 20, 2023 23:37:18 GMT
Something a little odd. SUTXX pays 1.88% according to TDAm, but 4.41% in Schwab.
Ditto for SWVXX 2.07% in TDAm and 4.49% in Schwab.
Barron's agrees with Schwab.
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Post by Fearchar on Mar 20, 2023 23:44:24 GMT
4.81% for 3 Months at todays T-Bill auction!
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Post by fishingrod on Mar 20, 2023 23:58:12 GMT
Something a little odd. SUTXX pays 1.88% according to TDAm, but 4.41% in Schwab. Ditto for SWVXX 2.07% in TDAm and 4.49% in Schwab. Barron's agrees with Schwab. Those are the Trailing Twelve months return. Not 7 day SEC yield.
Edit: At TD up above in green they have the 7 day yield as 4.47% for SWVXX, 4.37% for SUTXX
But TD is quoting from Feb. 28th
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Post by marquay on Mar 21, 2023 0:39:55 GMT
VUSXX er .09. 7 day yield 4.58%
Vanguard Treasury MM.
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Post by anitya on Mar 21, 2023 7:53:45 GMT
Something a little odd. SUTXX pays 1.88% according to TDAm, but 4.41% in Schwab. Ditto for SWVXX 2.07% in TDAm and 4.49% in Schwab. Barron's agrees with Schwab. SWVXX from TDA quote page "7 Day Yield +4.47% As of February 28, 2023" Probably lower now to reflect recent change in rates. If there is a difference between Schwab and TDA, pl check the "As of date" is the same. |
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Post by FD1000 on Mar 21, 2023 13:21:37 GMT
The yield is actually higher not lower at 4.49% as of 3/20.
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