Treasury Direct for cash

Investment Analysis Clubs Macro Economic Trends and Risks
1

With the Federal Reserve finally beginning to raise the fed funds rate, the yield on Treasury debt is rising faster than the yield offered by banks.

https://stockcharts.com/freecharts/candleglance.html?$IRX,$U…

The best place to buy Treasury debt is directly from Treasury Direct.
https://www.treasurydirect.gov/indiv/myaccount/myaccount_tre…

The best and safest place to save money right now (with a 1-year lag to withdraw) is the I-Series Savings Bond which is yielding 9.62%. (This is adjusted every 6 months along with inflation.)

https://www.treasurydirect.gov/indiv/products/prod_ibonds_gl…

Since only $10,000 can be invested per Tax ID per year, Treasury Inflation Protected Securities (TIPS) can be bought for larger amounts.
https://www.treasurydirect.gov/indiv/products/prod_tipsvsibo…

TIPS are marketable in the secondary bond market, unlike the I-Bond which is assigned to a specific person or trust. I think it’s too early in the cycle to buy TIPS but if their market yield were to increase I would consider it. TIPS are best if you think that inflation will continue to increase more than the market’s expectation, curently 2.35% over 5 years.
https://fred.stlouisfed.org/series/DFII10
https://fred.stlouisfed.org/series/T5YIFR

If you just want to hold a cash-like security, T-Bills are the way. The Treasury holds auctions on specific dates. Several large banks bid on the offered debt to set the interest rate. Everyone else can place orders with Treasury which are filled at the finalized rate. There is no charge for ordering this way. These are zero-coupon bills. You pay the listed price per $100 and get back $100 on the maturity date. This is part of the list.

https://www.treasurydirect.gov/instit/instit.htm?upcoming


Bills 	                                        High    Investment
                 Cusip          Issue date      Rate    Rate       Price per $100
4-Week		912796V97	05/17/2022	0.600%	0.609%	$99.953333
8-Week		912796W96	05/17/2022	0.755%	0.766%	$99.882556
13-Week		912796L64	05/12/2022	0.900%	0.915%	$99.772500
26-Week		912796W54	05/12/2022	1.385%	1.414%	$99.299806
52-Week		912796V48	04/21/2022	1.870%	1.923%	$98.109222

These are a higher interest rates than banks are paying on cash and CDs.

Since the Fed has already announced that it will be raising the fed funds rate in June and July by 0.5% each time, these rates will surely be rising.

I suggest buying the 13-week T-bill to get a little interest while waiting for rates to climb and rolling over as they do.

This is no time to be in bond funds of any duration. This is no time to be buying long-term bonds.
Or stocks.

Wendy

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2

Wendy,

Best to be in cash.

1 Like
3

I’m a great believer in cash. But a short-term Treasury bill held to maturity will return cash, with a little interest. It’s as safe as cash.

I do believe that enough cash should be held to cover expected expenses for the duration of the Treasury. For example, if the T-Bill is 3 months, hold enough cash to cover 3 months of expenses (plus some extra, just in case) because the T-Bill will mature and the cash will reappear.

Wendy