Regardless of how simple something seems if you don't fully understand it you should never trade it. I strongly recommend you read up on fixed income securities and pricing before you trade those instruments,bond math is so simple that you would not need to invest too much time. But I would never trade something I need to ask anonymous people on a chat forum how it works.
Buying Treasury Notes via IBKR
- Thread starter ET180
- Start date
It should not make any material difference, otherwise you could arbitrage one against the other. If he wants to hold until the maturity of the note then the only difference should be the coupon payment vs paying a pure discount for the bill and collecting face value at maturity. The yields should be very similar.
By the way I recently bought a bunch of bills maturing Dec20 and had to wait about 30 minutes until my limit order on the ask was executed. The liquidity provider was probably asleep on the desk (I assume that was the case because the order was for around 10mln notional) and an algo would have definitely filled me right away or not at all. I was surprised when I noticed that the fill was actually very close to the bid quotation. Both bid and offer did not move at all during that 30 minute window.
Another aside, a very hot topic in the fixed income industry currently are constant maturity tbill ETFs. Even different currencies and hence exposure to different interest rate regimes are under discussion, subject to demand I guess. How the etf works is that there is a monthly reset whereas the etf issues a "dividend" equal to the proportional monthly yield, the rest of the time the etf price increases nearly linearly, absent changes in the current 90 day tbill yields. I have not studied the prospectus of those vehicles so I might not be 100% accurate. Just thought this might he something some here are looking for.
By the way I recently bought a bunch of bills maturing Dec20 and had to wait about 30 minutes until my limit order on the ask was executed. The liquidity provider was probably asleep on the desk (I assume that was the case because the order was for around 10mln notional) and an algo would have definitely filled me right away or not at all. I was surprised when I noticed that the fill was actually very close to the bid quotation. Both bid and offer did not move at all during that 30 minute window.
Another aside, a very hot topic in the fixed income industry currently are constant maturity tbill ETFs. Even different currencies and hence exposure to different interest rate regimes are under discussion, subject to demand I guess. How the etf works is that there is a monthly reset whereas the etf issues a "dividend" equal to the proportional monthly yield, the rest of the time the etf price increases nearly linearly, absent changes in the current 90 day tbill yields. I have not studied the prospectus of those vehicles so I might not be 100% accurate. Just thought this might he something some here are looking for.
Last edited:
But are that constant maturity etf products subject to state and local taxes? Treasuries are not. Since I live in a state with confiscatory state income taxes, I might be better off over allocating my long exposure to short term treasuries. Even if I end up borrowing on margin, that interest paid offsets my capital gains which are subject to state and federal taxes. But the interest received from the treasuries are only subject to federal. So even if I have to borrow at a slightly higher rate relative to interest received from treasuries, it seems like it could make sense.
Right click on the instrument and select Description or Information. All details are in there.
FYI. The commission you see is probably derived from the spread where the dealer gets paid. So, you may be waiting awhile to get hit at the bid. Gotta give the dealers something for the transaction. I don't think there is a commission on any bonds.
Are you using IB ? You probably know that already but the issue of orders on the Ask not filled already came up, from memory one gets a faster fill with Raw price (but at the same time I can´t even find anymore the setting on my TWS...), I hadn´t checked this for a while, curious to know whether it changed
https://www.interactivebrokers.com/lib/cstools/faq/#/content/35806043
"In addition, the Classic TWS/Mosaic Ticker Row also has settings for a Fixed Income market data line which allow you to select "Show Raw Price" (will not include any extra fees that may be charged by the exchange) or "Show Net Price" (will include any extra fees that may be charged by the exchange). To make this election, click the Edit (Classic TWS) or File (Mosaic) menu options, select Global Configuration, expand the Display section and click Ticker Row.
I can't comment on taxes, I would not know, as I am taxed fully at income here in Canada for foreign earn interest.
That's very interesting that you mention it because I recalled the same and searched everywhere but could not find this setting anymore. I assumed IB changed something and I just let it sit at the offer price for a while and eventually got filled much better than expected.
Is there a particular maturity that has more liquidity than others -- for tighter bid/ask spread and higher chance of getting filled? I submitted an order for the Jan 3 maturity which seemed to have a tighter spread than the other nearby maturity, but not getting filled. I assume that you just do a GTC order and eventually it gets filled...might take a few hours or days?
Wait a minute, this is yielding 3.08% over two months?? So if you keep reinvesting them every 2 months for one year, you will actually earn a yield of 3.08% X 6 = 18.48%???!!! Almost 20% return on just Treasury notes??!!
Is this a serious question? Because if it is you should pause trading, including equities and rather read up on the basics of asset pricing and the current market environment. There is no way you can make money over time if you honestly think you can earn a 18% return on treasuries right now.