36 votes

How Is There A Yield Curve For Treasuries?

The basic detail you're missing is that you can't redeem the bond for it's face/par value until maturity. If you buy the 30 year bond at 2.5% now, and in one year's time the rate for a new 29 year ...
GS - Apologise to Monica's user avatar
32 votes
Accepted

How Is There A Yield Curve For Treasuries?

There are some good answers already but I think it would help to walk through a concrete scenario under your implied hypothesis. "Why buy a 1-year Treasury Bill at 1.25%, when I can buy a 30-year ...
Grade 'Eh' Bacon's user avatar
28 votes
Accepted

If US Treasuries at yielding 4-5% right now, why can't I find an ETF that yields that amount?

Over the last 12 months, SGOV yielded 1.84%, but the current SEC yield (30 days ending on the last day of last month) is 4.41%. If you want to know what a fund or ETF yielded most recently, look at ...
Stan H's user avatar
  • 6,961
24 votes
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If Turkey doesn't go bankrupt, is there any chance they won't pay bonds profits?

You're contemplating paying 30,000 lira ($5000 US or 4400 EUR) today for bonds with a face value of 37,500 lira. If Turkey doesn't go bankrupt, in one year the bonds will pay out 37,500 lira. If you ...
Ben Voigt's user avatar
  • 6,787
18 votes
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Why would someone buy bonds with yields comparable to US Treasury bonds?

Isn't it more rational to just buy US Treasure bonds if you can't earn a significantly higher yield from Corporate/Municipal bonds? Say you're a large fund, like California's state pension fund. ...
user71659's user avatar
  • 3,299
17 votes

Why would someone buy bonds with yields comparable to US Treasury bonds?

Munis are tax-advantaged, so you'll need to factor in your tax rate to convert the quoted yield to a tax-equivalent yield you can compare to taxable securities.
0xFEE1DEAD's user avatar
  • 8,488
15 votes
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Do x-year treasuries become y-year treasuries (x-y) years later?

Yes, these are called "off-the-run" treasuries. Since they are not sold by the treasury directly but sold in secondary markets, they are less liquid than "on-the-run" treasuries ...
D Stanley's user avatar
  • 133k
15 votes

safe investment for maintaining purchasing power

One year is very short term in terms of investment horizons. Depending on your anticipated distribution/spending pattern, the most appropriate choice is likely either a high-yield savings account, CD, ...
yoozer8's user avatar
  • 9,504
13 votes
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TreasuryDirect.gov not showing monthly interest gained on an I bond

They don't include the interest for the last 3 months until the holding period requirements are met. So you'll start seeing interest accruals in 3 months. After 5 years of holding they'll add the last ...
littleadv's user avatar
  • 171k
13 votes

Why would someone buy bonds with yields comparable to US Treasury bonds?

First: who said anyone is buying? If something is available for sale, it doesn't necessarily mean someone is buying. Second, and more important: A lot of investors and funds work based on a pre-...
littleadv's user avatar
  • 171k
12 votes

If US Treasuries at yielding 4-5% right now, why can't I find an ETF that yields that amount?

The average yield to maturity of SGOV is 4.41%. The 2% is the 12-month trailing yield. From https://www.ishares.com/us/products/314116/ishares-0-3-month-treasury-bond-etf: Note that the average yield ...
Franck Dernoncourt's user avatar
10 votes
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Financing kids' college with bonds

Could I buy 10 year treasuries? Sure Would that be a good choice? Well it would be safe (meaning you would definitely get exactly the yield you bought into) but college costs have risen much more ...
D Stanley's user avatar
  • 133k
10 votes

How can the purchase cost of a treasury bill be more than its face value?

The discount is determined at the auction, no-one guarantees you the 5%. You may end up paying more than the face value if at the auction the discount becomes negative (i.e.: becomes a premium), which ...
littleadv's user avatar
  • 171k
9 votes

Is there a catch in investing in treasuries close to maturity date?

The question seems to be whether you can benefit from the (normally) higher yield of a longer-term bond but limit your risk by buying it close to maturity. The answer is you cannot, because you have ...
nanoman's user avatar
  • 29.5k
8 votes

safe investment for maintaining purchasing power

You can certainly buy US federal inflation-protected bonds directly from the government. See https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/ . Note that the interest rate ...
keshlam's user avatar
  • 44.7k
7 votes

How do I cash my stimulus check if I have lost my ID and have no bank account?

You will need to obtain a new photo ID. You can check with your new state’s DMV office to see what the requirements are and how you can meet them. They may or may not accept the photocopies you have. ...
Ben Miller's user avatar
  • 115k
7 votes
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If I bought one treasury bond for 100.0 ($1000), then its market price become 110.0, does my profit be $100?

Profit is sales price - cost - expenses. So yes, if you bought something for $1000 and sold it for $1,100 your profit is $100, assuming no transaction fees. It is irrelevant if you are buying and ...
JohnFx's user avatar
  • 53k
7 votes

How Is There A Yield Curve For Treasuries?

You cannot count on a crisis (specifically a deflationary crisis) happening just when you want to liquidate. If you need to sell a long-term bond (before maturity) during unexpectedly strong economic ...
nanoman's user avatar
  • 29.5k
7 votes

Why wouldn't a broker let a retail investor choose the order type when purchasing Treasury bills via auctions?

Brokers do allow that, just not through their self-service. If you want to place a competitive bid - call the bond desk. Retail investors do not buy treasuries in any volume large enough for the ...
littleadv's user avatar
  • 171k
6 votes
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How can I track TreasuryDirect savings bonds with Mint?

Unfortunately, Mint cannot connect with TreasuryDirect to track savings bonds. But, you can manually add the value of the bonds as "other property" in Mint and update it manually on a monthly basis (...
kponz's user avatar
  • 943
6 votes
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Why is there a discrepancy between current inflation rate and I bond rate in the US?

The "inflation rate" for the i-bond is based on the past 6 months of CPI values, not a whole year.
D Stanley's user avatar
  • 133k
5 votes
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Are there market makers in bonds market?

Bonds are not traded on an exchange like stocks, and so there are no "designated" market makers like for stocks, but there are some brokers that will buy and re-sell bonds to keep liquidity ...
D Stanley's user avatar
  • 133k
5 votes
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Why would anyone buy an old treasury while it is regularly auctioned during the year?

Because the price will change to so that the yield is "fair" (according to market expectations) and people want to use their money for other things now rather than waiting for the next ...
Justin Cave's user avatar
  • 27.2k
5 votes

Why is there a discrepancy between current inflation rate and I bond rate in the US?

It takes time to compute inflation. That's why the reset inflation rate in May and November does not use the values for May and November inflation (it is not yet available when the rate is announced). ...
AKdemy's user avatar
  • 2,735
5 votes
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Treasury Yields -- Quoted on an Investment Basis vs. Discount Basis

The convention for US treasury bills is discount yield. Constant maturity series (CMS) are not actual treasury yields but a computed construct that has always a set maturity (1 year for example). ...
AKdemy's user avatar
  • 2,735
4 votes
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Are T-Bills "coupon equivalent" rates based in annual terms?

Annualizing offers a simpler way to compare 1 mo, 6 mo, and 1 yr treasuries. "Do I want to invest for 6 months to get 1%/yr or a year to get 1.1%?" That kind of choice.
JTP - Apologise to Monica's user avatar
4 votes
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Why does Yahoo Finance list the 10y T note (TNX) at 1/10 of CBOE and Google Finance?

The CBOE states, in an investor's guide to Interest Rate Options: The Options’ Underlying Values Underlying values for the option contracts are 10 times the underlying Treasury yields (rates)— ...
Joe's user avatar
  • 35.8k
4 votes

Bond income calculation question

Assuming you bought one $1,000 note, you will get $1,005 at maturity. The $1,000 principal plus the 0.5% (semi-annual 1%) coupon. You paid for roughly 2 months of accrued interest ($5 * 2/6 = 1.67) ...
D Stanley's user avatar
  • 133k
4 votes
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Comparison of Mortgage Rate vs 10 Year Treasury Rate

The tax-deductibility of interest is a piece of the puzzle, but not "the" reason to not pre-pay. I highly recommend you read another question here, Oversimplify it for me: the correct order of ...
JTP - Apologise to Monica's user avatar

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