Where To Buy 7 Or 10 Year Treasury Yields?

bboy | Oct 5, 2023 | 8 posts since 2019

I'm trying to figure out where to buy the treasury yields mentioned in the beginning of the most recent liquid rate article. Are those the same things as bonds or notes? I went to treasury direct and I didn't see anything that said yields but there was stuff that said bonds and notes and other stuff. I was looking at maybe the 7 or 10 year. Could someone please steer me in the right direction? Thanks!

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Answers

MAKNYC | Oct 5, 2023 | 323 posts since 2015

Go to www.savingsbonds.gov or treasurydirect.gov. Click on the auctions drop down menu on the second line. That will provide almost any info you want concerning upcoming and past auctions as well as the process. Since you mention treasury direct keep in mind you would be limited to purchasing new issue bills/bonds/notes only at auction. Those rates are set at a specific moment in time. At any brokerage firm you could also buy any already issued security at the current market rate, which could be very different from where the security was auctioned. That also gives you more opportunity to select terms you desire, such as a specific maturity date, as opposed to the government forcing your hand by their auction scheduling.

RichardW | Oct 5, 2023 | 810 posts since 2019

The answers previously posted by MAKNYC, w00d00w, and njs are excellent. Here is some additional background information regarding how to buy Treasuries: This article by Harry Sit of The Finance Buff https://thefinancebuff.com/buy-treasury-secondary-market.html discusses some of the pros and cons of purchasing secondary market vs new issue Treasuries. It also details how to buy secondary market Treasuries through Fidelity, Vanguard, Schwab, and Merrill Edge. This article by Harry Sit of The Finance Buff https://thefinancebuff.com/treasury-bills-cd-money-market.html describes how to buy new issue Treasuries through Fidelity, Vanguard, and Schwab.

w00d00w | Oct 5, 2023 | 360 posts since 2012

other than Treasury Direct, can buy Treasury offerings at auction or in secondary market through a brokerage like Fidelity in increments of $1000. if wanting the option of selling before maturity, buying through a brokerage would be best.

w00d00w | Oct 6, 2023 | 360 posts since 2012

wanted to add this from Fidelity, if considering buying Treasury bonds in the secondary market for a taxable account:

There may also be tax consequences when you sell Treasurys that you bought on the secondary market. If you buy a bond for less than face value on the secondary market and either hold it until maturity or sell it at a profit, the gain will be subject to federal and state taxes. This is different than buying a Treasury bill at Original Issue Discount (OID). When a bond is sold or matures, gains resulting from purchasing a bond at a discount in the secondary market are treated as capital gains while OID gains are taxed as income.

https://www.fidelity.com/learning-center/trading-investing/how-to-invest-in-treasurys

MAKNYC | Oct 6, 2023 | 323 posts since 2015

This tax treatment aspect would be an advantage in many cases, especially to those in non-tax states. U.S. treasury interest is fully federal taxable. You would have effectively converted what would be considered interest income (taxed as ordinary interest income) into capital gain which for many filers would be taxed at a lower marginal rate. That said, I believe this statement provided may not be entirely correct. I think it would be partially correct if the purchased bond is actually sold prior to maturity. The portion of the sale price gain that was distinct from the discount that was amortized during the holding period would be treated as capital gain. If the purchased bond is held until maturity (and redeemed by the US Treasury), I believe the entire ‘gain’ would be treated as interest (ordinary) income, unless the de minimus rule kicks in. Either way, this is unlikely to be a game changer for anyone considering such an investment. It is a very meaningful issue in the world of municipal bonds where a portion of their income now becomes federally taxable.

P.s. if you live in a state with taxes it is quite possible the discount amortization portion would not be treated as U.S Treasury interest and hence would be taxable at the state level. Not sure. I left NYC for Texas so I didn't have to worry about this stuff anymore. :)

njs | Oct 5, 2023 | 71 posts since 2019

Bills, notes and bonds are auctioned off regularly by the Treasury. The 5, 7 and 10 year are monthly. Shorter terms are more frequent. Anything over one year pays interest to your linked account semiannually. You can find a list of upcomming auctions online. You can set up a treasury direct account and purchase securities at auction. Very easy. Yeilds aren't listed for the auction but they can be found online. And will be close to current treasuries for non-competitive bids. There is a secondary market with brokers also.

bboy | Oct 6, 2023 | 8 posts since 2019

Thanks for all the great comments! I'll check out your leads. One thing that confused me is yesterday's liquid article by Ken said the treasury yields for 5 and 10 years were about 4.7% but when I went to treasury direct, it showed the 10-year as 3.8 or so?

MAKNYC | Oct 6, 2023 | 323 posts since 2015

It looks like you saw the coupon. It is in fact 3.875%. That is because the last 10 year auction on September 12 was a reopening of the 10 year that was auctioned on August 9. In other words the security terms were finalized at the August auction, and then a month later the Treasury sold additional securities. So participants of that auction technically purchased 9 year, 11 month securities, but it is still regarded as a '10 year'. Because rates had moved so much between those two auctions, the purchasers in the September auction only paid 96.678677 for each bond, which worked out to a 4.289% yield. The Treasury is set to sell another $35 billion of this same security on October 11 and current yields are even higher....in the 4.73% range. And it would be a 9 year, 10 month security at that point, but would be regarded as the current 10 year until they issue a non-reopened 10 year. here are the details:

Most recent auction:
https://treasurydirect.gov/instit/annceresult/press/preanre/2023/R_20230912_2.pdf
Next weeks:
https://treasurydirect.gov/instit/annceresult/press/preanre/2023/A_20231005_1.pdf

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