4 Week Treasury Bill

arthurtony | Dec 7, 2022 | 24 posts since 2016

I need opinions on the 4 week t-bill. Will the yield change much from this week to next at the auction based on Fed decision next week? Which duration t-bill would be best, in your opinion, this week or next. I know the rate won't change dramatically, but things are happening so fast, even 4, 8, or 13 weeks is a long time.

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Answers

MineSweeper | Dec 7, 2022 | 68 posts since 2021

I suggest a ladder as it is very difficult to determine the direction on interest rates. So divide the amount you want to purchase one bill for each length that way you can benefit for any increases and minimize the down side risk as well

w00d00w | Dec 7, 2022 | 360 posts since 2012

with the target fed funds rate increasing next week, rates on the short end of the yield curve should go up. FWIW, my expectation is that the 4 week yield will be higher next week, after the Fed decision.

CDmanFL | Dec 7, 2022 | 286 posts since 2019

I agree and if there is a CD God out there, let’s hope we get some good long-term CD rates, maybe back to 5%. And a good add-on CD (like MACU but without a cap) would be good if the CD God is listening. And not to press my luck, but how about some higher rates at Navy as well. And more penalty free withdrawals from other institutions. C’mon CD God, help us beaten and bruised savers.

MAKNYC | Dec 7, 2022 | 323 posts since 2015

The short answer is no. The current (and auction) market pricing already take into account all anticipated future Fed interest rate moves. It’s not likely you will see any meaningful gap up in yields post Fed announcement. What you will likely see is that the yield will trend higher in between meetings by a smaller amount each week, to the extent that future expectations are not changed by any announcement. I suspect what you’re worried about is a roughly .50 bps change in auction yield from the auction prior to the Fed announcement to the auction immediately after. That does not usually happen.

As for the second question, that’s tougher and more personal. Depends on your view of future Fed actions and market reactions in the interim. But since all of your considerations still fall into the short term horizon, it probably won’t make much of a difference in the ultimate return.

CTM | Dec 7, 2022 | 179 posts since 2010

The Treasury provides a large number of resources that might help you in making a purchasing decision. The link below is to the daily Treasury Bill (par) yields in the secondary market for all of 2022. When visualized, this data creates the par yield curve. You can easily compare the spread between different duration Bills and see the yield reaction to the Fed's interest rate announcements. Depending on your browser, you may have to click the "Apply" button.

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treas...

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