Going To Try US-T Bills

[Kayeesha]

E.g.

For a buy order.

Bid price 98.3. Ask price 98.5

If I do buy limit 98.5, I'll get something like 98.45. If I do buy limit 98.3, it might get executed but usually will take a while.

Regarding TWS version, I don't think it makes any difference (unless you use advanced features e.g. API). I personally use latest.

For your example, I’ll be inclined to place a limit to buy at 98.4. But according to IBKR website, an order that adds liquidity, which is the case here, will incur a $2.50 fee. When I checked with the customer service, I was told otherwise. Hence my confusion. But you said you have never been charged any fee irrespective of what price you place. Am I correct?

 

[reddevil0728]

For your example, I’ll be inclined to place a limit to buy at 98.4. But according to IBKR website, an order that adds liquidity, which is the case here, will incur a $2.50 fee. When I checked with the customer service, I was told otherwise. Hence my confusion. But you said you have never been charged any fee irrespective of what price you place. Am I correct?

customer service may not always know what they are talking about

and sometimes they rather err on the side of caution in case they give wrong info, u kena charged 2.50 and ask them to cough up the diff

hence the best bet is really to try it for yourself regardless of what other ppl confirm

 

[Niaoson]

Looking for something with a longer maturity date than T-bills i.e. corporate bonds. Anyone has experience buying them? Is the interest payment subject to withholding tax?

 

[narutos]

Looking for something with a longer maturity date than T-bills i.e. corporate bonds. Anyone has experience buying them? Is the interest payment subject to withholding tax?

For Singaporean, no withholding tax for interest, also no estate tax.

 

[BBCWatcher]

Looking for something with a longer maturity date than T-bills i.e. corporate bonds. Anyone has experience buying them? Is the interest payment subject to withholding tax?

U.S. Treasuries are available with tenors out to 30 years if you want. Corporate bonds aren’t unique in that way.

 

[Niaoson]

For Singaporean, no withholding tax for interest, also no estate tax.

Nice! Confirm this is even for corporate bonds and not just T-bills?

U.S. Treasuries are available with tenors out to 30 years if you want. Corporate bonds aren’t unique in that way.

Yes true but US treasuries tend to have lower yield then corporate bonds, at least from what I have found so far.

 

[narutos]

Nice! Confirm this is even for corporate bonds and not just T-bills?

I'm referring to us corporate bonds. T-bill i no buy so i didn't check.

 

[reddevil0728]

Nice! Confirm this is even for corporate bonds and not just T-bills?


Yes true but US treasuries tend to have lower yield then corporate bonds, at least from what I have found so far.

Cause corporate bonds also more risky than us treasuries

 

[revhappy]

Very tempting to convert to USD and buy Tbills at this FX rate. 1.323, unbelievable!

 

[revhappy]

For Singaporean, no withholding tax for interest, also no estate tax.

I noticed a 1yr t bill Vs a 10 yr treasury bond with just 1yr remaining, have same duration, but the yield on the 10 yr treasury bond is slightly higher, that t bill. So I am planning to buy the T bond with a dirty price and coupon accrued to be paid out. I wonder is there is witholding tax? @BBCWatcher

 

[henrylbh]

Very tempting to convert to USD and buy Tbills at this FX rate. 1.323, unbelievable!

Dont waste time on US T-Bill even if the rate is 1.5% higher. You buy at 1.323 and when you sell at 1.30 you gonna lose money compare to 4% SG T-Bill not counting any charges in buying/selling the Bill. Unless you are betting the selling rate is gonna be higher than your buying rate or the same, the absolute amount of gain before charges would be small unless you are placing hundred of thousand $$$,$$$. If there is withholding tax, quite likely you will lose if the yield is slightly more than SG T-bill.

 

[henrylbh]

Treasury Secretary Janet Yellen on Friday notified Congress that the U.S. will reach its statutory debt limit next Thursday.

After that, the Treasury Department will begin “taking certain extraordinary measures to prevent the United States from defaulting on its obligations,” Yellen wrote in a letter to House Speaker Kevin McCarthy, R-Calif.




While Treasury, “is not currently able” to estimate how long those emergency actions will allow the U.S. to pay for government obligations, “It is unlikely that cash and extraordinary measures will be exhausted before early June,” she wrote.

“I respectfully urge Congress to act promptly to protect the full faith and credit of the United States,” Yellen wrote.

Friday’s notification from Yellen effectively starts a clock counting down how long the federal government can continue to make interest payments on its debt.

The so-call called extraordinary measures available to the Treasury secretary can free up billions of dollars that have been technically committed to other purposes, but not spent yet.

This can extend the clock for weeks or months while Congress hashes out a bill to raise the borrowing limit.

A senior White House official told CNBC that the White House plans to try to cut a deal with Congress to raise the federal debt ceiling after the mid-April deadline for income tax return filings. The official said the White House will not have enough details to negotiate a deal until it sees the level of income tax receipts.

But the debate over raising the debt ceiling is expected to be particularly fraught this year in light of the new Republican majority in the House of Representatives.

McCarthy has made little secret of the fact that Republicans intend to demand massive spending cuts to the federal budget in exchange for approving an increase in the debt ceiling.

 

[revhappy]

Dont waste time on US T-Bill even if the rate is 1.5% higher. You buy at 1.323 and when you sell at 1.30 you gonna lose money compare to 4% SG T-Bill not counting any charges in buying/selling the Bill. Unless you are betting the selling rate is gonna be higher than your buying rate or the same, the absolute amount of gain before charges would be small unless you are placing hundred of thousand $$$,$$$. If there is withholding tax, quite likely you will lose if the yield is slightly more than SG T-bill.

Thanks, I actually ended up converting SGD to USD and bought a 1yr US Tbill.

Also I sold couple of QQQ puts to earn some premium.

I converted to USD at 1.3235 and now already I am down to 1.319.

So you are right it makes no sense to buy US tbills on their own. But we could use that as collateral and earn some option premium.

There is a inverse correlation between stocks and DXY. So if USD keeps falling, it should give some support to stocks.

I know this is a different level of risk I am taking, here.

 

[reddevil0728]

Thanks, I actually ended up converting SGD to USD and bought a 1yr US Tbill.

Also I sold couple of QQQ puts to earn some premium.

I converted to USD at 1.3235 and now already I am down to 1.319.

So you are right it makes no sense to buy US tbills on their own. But we could use that as collateral and earn some option premium.

There is a inverse correlation between stocks and DXY. So if USD keeps falling, it should give some support to stocks.

I know this is a different level of risk I am taking, here.

but you can use SGD as collateral also.

 

[BBCWatcher]

I noticed a 1yr t bill Vs a 10 yr treasury bond with just 1yr remaining, have same duration, but the yield on the 10 yr treasury bond is slightly higher, that t bill. So I am planning to buy the T bond with a dirty price and coupon accrued to be paid out. I wonder is there is witholding tax? @BBCWatcher

AFAIK the only people subject to withholding on U.S. Treasuries are: (a) people who have a record of delinquency with the IRS or some other legal dispute (example: child support delinquency), and (b) sanctioned individuals. I assume you aren't in either of these small categories.

Treasury Secretary Janet Yellen on Friday notified Congress that the U.S. will reach its statutory debt limit next Thursday....

Yeah, this "drama" happens every couple years. Yes, these U.S. House Republicans are probably the most nihilistic elected representatives since at least the Civil War, but I wouldn't worry about this drama. It could get nasty, and there could be new legal ground broken, but (thank you Alexander Hamilton!) the U.S. Constitution's drafters got this one right. There's a clause in the U.S. Constitution that effectively prevents Republicans in Congress from forcing a default. There's also another legal loophole you could drive a platinum truck through if necessary.

House Republicans can force a partial U.S. federal government shutdown, but that's happened before, too. And they've always caved before, and with severe political damage to them. The whole House stands for election every 2 years, so voters can chuck them out soon.

One helpful aspect this time is that House Republicans hold such a narrow majority that it isn't even workable. So 5 Republicans can join the (soon) 213 Democrats to lift the debt ceiling that isn't even binding if push comes to shove (Constitution). There are pretty high odds of that, but even if not there are failsafes.

To be clear I certainly don't think this is a good way to run a government, and these Republicans are crazy and dangerous. But I'm not worried about this particular gambit. The President, the Treasury Secretary, the Fed Chairman, and the Attorney General will do what they need to do if necessary. They'll hang their hat on the supreme law (the Constitution), and they'll be correct. The U.S. Supreme Court will back them up if necessary. And there's always the platinum coin option.

 

[revhappy]

but you can use SGD as collateral also.

I just calculated, on 80k SGD, the interest paid out on free cash balance is 1.1%.

If SG Tbills were available on IBKR, it would be a no brainer to buy and then sell some equity puts.

 

[churnmaster]

Thanks, I actually ended up converting SGD to USD and bought a 1yr US Tbill.

Also I sold couple of QQQ puts to earn some premium.

I converted to USD at 1.3235 and now already I am down to 1.319.

So you are right it makes no sense to buy US tbills on their own. But we could use that as collateral and earn some option premium.

There is a inverse correlation between stocks and DXY. So if USD keeps falling, it should give some support to stocks.

I know this is a different level of risk I am taking, here.

You had bought some 6 mth UST earlier as well . . Right ?

 

[churnmaster]

I just calculated, on 80k SGD, the interest paid out on free cash balance is 1.1%.

If SG Tbills were available on IBKR, it would be a no brainer to buy and then sell some equity puts.

Buy A35/MBH on FSMOne and then transfer out to IBKR. This can be used as collateral for selling puts. Just convert limited amount of SGD to USD (say around 1.5-2 times your margin requirement) . . That way most of your capital will still be in SGD earning a decent return with no FX risk and also acting as collateral for option writing.

 

[revhappy]

You had bought some 6 mth UST earlier as well . . Right ?

I got out of it and converted everything back to SGD. But now I see USD is down again, I got tempted. If you see USDSGD 5 year chart, it seems 1.32 is like the bottom.

There is an inherent hedge when I keep everything in USD and then sell puts on QQQ. If markets crash, pretty sure USD will rise and if USD falls QQQ cannot fall much.

SGD itself I feel is at 1.32 is fairly valued, not undervalued. If inflation starts falling there is no need for SGD to be so strong and SGD rates to be so high.

 

[reddevil0728]

Buy A35/MBH on FSMOne and then transfer out to IBKR. This can be used as collateral for selling puts. Just convert limited amount of SGD to USD (say around 1.5-2 times your margin requirement) . . That way most of your capital will still be in SGD earning a decent return with no FX risk and also acting as collateral for option writing.

Can buy directly via IBKR if is the sg entity no?

but then again unlike treasuries, bond etf might have capital loss