Treasury Market Liquidity Crisis? | Treasury Bond Buybacks Explained 2024
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- Опубліковано 30 тра 2024
- What is the Treasury buyback program & what does this if have to do with a liquidity crisis in the Treasury market (if any)? Plus, how will the Treasury buyback program & any potential liquidity issues issues really impact you, me & the overall market? THAT is what we're talking about in today's video!
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*Sources can be found in first pinned comment
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What I appreciate most about you is that you have established yourself as very trustworthy!
Good video Jennifer. Thank you for explaining this bond buyback program.
Thanks for sharing. Very important for folks to understand what's going on - the potential prospect of the collapse of treasuries is frightening, to say the least.
Thank you so much for the great explanation.
Excellent. Thank you.
Thank you Jennifer. Much appreciated.
I have been curious about the buyback program. Thanks so much for explaining it.
I have learned so much from you. You need to be a teacher at high school level teaching Finance. Finance and business classes are not even offered at most high schools.
She is college level, graduate school level. Numerous high schools around my area, offer business classes, including personal finance and accounting.
It would be very easy for those teachers to use this ladies video as a teaching tool. Along with many others on UA-cam that present good information.
I agree with you many schools do not offer it though.
@@g.t.richardson6311
I sure she could teach college level or graduate level students. But she explains Finance at such a level high school kids could understand. No offense intended.
@@markpaulin884 good point
She does explain things in very basic terms that most anyone can understand
I know one of the guys who teaches business classes at my local high school.
I coach tennis there, I am going to suggest when he gets to his chapters on fixed income, he considers using her videos to help explain things.
I agree it should be taught in School. I think the educational system does not want the public to be literate in Finance for some reason..
Thanks, Jenn for your great info and all your hard work in keeping up with it to pass it on.
Like your videos. I do have a federal money market fund and a high yield bond ETF. Understanding bonds is complex. I watch and listen though.
Very good video to newbie of treasury bond.
📢 Learn all about bond investing in our bond courses (and how to build a bond portfolio) while bond yields are high 👉 join Bond Beginners today (our foundational-level bond course): www.diamondnestegg.com/bond-beginners
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Here is the overview for Bond Beginners:
1. Bond Basics
What A Bond Is & How A Bond Works
Why Invest In Bonds
New Issue vs Secondary Market Bonds
Interest Rates & Bond Prices
Current Yield & Yield To Maturity
Always Remember This!
Buying At Par, Above Par & Below Par
Different Types Of Bonds
Wrap-Up
2. The Risks Of Bond Investing
Seven Key Bond Risks
Credit Risk
Interest Rate Risk
Reinvestment Risk/Call Risk
Inflation Risk
Liquidity Risk
Currency Risk & Country Risk
Bond Risk Mitigation Strategies
Wrap-Up
3. US Treasuries Overview
What Are US Treasuries
Why Invest In Treasuries
Where Can You Buy Treasuries
How Are Treasuries Taxed
Wrap-Up
4. Treasury Bills
What Are Treasury Bills (T-Bills)
When Do T-Bill Auctions Happen
Where Should You Buy At Auction
Auto-Roll When Buying At Auction
Where To Find Recent Auction Results
High Rate vs Investment Rate
Reopening Auctions
Cash Management Bills (CMBs)
Buying & Selling On Secondary Market
Wrap-Up
5. Treasury Notes & Bonds
What Are Treasury Notes & Bonds
When Do Auctions Happen
Buying Treasury Notes & Bonds
Auction High Yield vs Interest Rate
Floating Rate Notes (FRNs)
Treasury Zeros (STRIPS)
Wrap-Up
6. TIPS (Inflation-Protected)
What Are TIPS
When Do TIPS Auctions Happen
Nominal vs Real Yields
Negative Yields
How Do You Adjust TIPS For Inflation
Taxes On Phantom Income
Secondary Market Liquidity
Wrap-Up
7. I-Bonds (Inflation-Protected)
What Are I-Bonds
How Does I-Bond Interest Work
I-Bonds vs TIPS
The Annual I-Bond Limit
Wrap-Up
8. Agency Bonds
The Universe Of Bonds
What Are Agency Bonds
How Are Agency Bonds Taxed
Treasuries vs Agencies
Who Might Want To Consider Agencies
Yield-To-Call & Yield-To-Worst
Where Can You Buy Agency Bonds
Wrap-Up
9. Municipal Bonds
Our Bond Universe Gets More Complex
What Are Municipal Bonds
How Safe Are Munis
How Are Munis Taxed
The De Minimis Rule
Social Security & Medicare Premiums
Treasuries, Agencies & Munis
Who Might Want To Consider Munis
Wrap-Up
10. Corporate Bonds
Our Bond Universe Is Complete
What Are Corporate Bonds
How Safe Are Corporates
Corporate Bond Hierarchies
Five Key Features Of Corporate Bonds
How Are Corporates Taxed
Treasuries vs Corporates, Etc.
Who Might Want To Buy Corporates
Wrap-Up
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Here is the overview for Bond Masters:
1. Stocks vs Bonds
Historical Performance
Are Bonds Really Less Volatile
Why Invest In Bonds
Accumulation vs Decumulation
Allocation of Stocks vs Bonds
Wrap-Up
2. Which Bonds Might Be Right For You
Treasuries & Other Types of Bonds
Nominal vs Real Yields
Inflation vs Non-Inflation-Protected
Taxable vs Tax-Advantaged Accounts
Wrap-Up
3. Bond Ladders & Other Bond Strategies
Normal vs Inverted Yield Curve
What Is A Bond Ladder
5 Important Bond Laddering Questions
Laddering When Rates Are Rising
Laddering When Rates Are Falling
Laddering When Rates Are Uncertain
What Is A Bullet
What Is A Barbell
Wrap-Up
4. Holding to Maturity vs Selling Early
Why Hold to Maturity
When To Sell Early Before Maturity
Tax Implications Of Selling Early
Wrap-Up
5. Individual Bonds, Bond Funds, Etc.
Why Buy Individual Bonds
Why Buy Bond Funds
Bond Fund Considerations
Key Bond Fund Concepts
CDs vs Treasuries
Other High-Yield Investments
Wrap-Up
6. Our B.E.S.T. Model Portfolios By Age
Our B.E.S.T Model Portfolios By Age
Model Portfolios In The Industry
B.E.S.T Model Portfolio Difference
How Much Do You Need To Retire?
How I Use The Rules of 100, 110, & 120
B.E.S.T Model Portfolios (20s)
B.E.S.T Model Portfolios (30s & 40s)
B.E.S.T Model Portfolios (50s & 60s)
B.E.S.T Model Portfolios (70s+)
Wrap-Up
7. The Decumulation Phase
What Is The Decumulation Phase?
Bear Markets & Recessions
What Can You Do In Bad/Bear Markets
Decumulation Tax Considerations
The 4% Rule
The Bucket Strategy
The Flooring Approach
Jen’s Bucket Strategy With A Twist
Wrap-Up
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SOURCES FOR TODAY'S VIDEO:
home.treasury.gov/news/press-releases/jy2315
home.treasury.gov/system/files/221/Tentative-Buyback-Schedule.pdf
treasurydirect.gov/help-center/faqs/buyback-faqs/
www.wsj.com/finance/stocks/global-stocks-markets-dow-news-05-29-2024-f5ea8a60?mod=latest_headlines
www.bloomberg.com/news/articles/2024-05-28/stock-market-today-dow-s-p-live-updates
treasurydirect.gov/instit/annceresult/press/preanre/2024/BBR_20240529174000.pdf
treasurydirect.gov/instit/annceresult/press/preanre/2020/A_20200723_7.pdf
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amen!!
Sound information. I say this as a Street pro.
You guys a so great
I tried to sell a $38,000 T-Bill 1 month early on Vanguard and you could only sell in $100,000 increments. Not so liquid I learned.
The 100k may be only for the quoted best price. I am not sure how it is with Vanguard but with other brokers there is sometimes an icon for depth of Book where you can see other buyers willing to buy smaller amounts at a slightly lower price. You then select one of those to offer to sell your 38 T-bills.
Better to buy directly from Treasury Direct.
Im curious if this is a way to help underwater banks that didn't mitigate their bond risk(SVB comes to mind) when the Fed when they said higher for longer
What’s up with i bonds? Are they holding their value? Are you still holding them? Are you still buying more?
ALright so I just began buying Charles Schwab SNSXX a few months ago. Would this apply to that money market?
Very good, ty. I'm still a little unsure about what a Liquidity Crisis would be in the bond market and what it's ramifications for the treasure, bond buyers and sellers would B. My guess would be that buyers would have less cash to buy bonds, new bond yields would go up, secondary market bond prices would drop, and future interest payments would be a bigger burden for the treasury. Or is it no one would want to sell their bonds on the secondary market because the new bond yields are much lower. 🙃
Bid-ask spreads typically widen significantly during a liquidity crisis
@@DiamondNestEgg It's only a crisis if your ask is higher than the bid. Lol
Can someone explain the logic of using debt with a 5% interest rate to buy back other debt with a 0.3% interest rate?
They are getting the old debt at a discount due to current market conditions. Therefore the reduced price may cancel out the higher interest rate.
its not purchased at the full value because its worth less when it has a lower interest rate so its really a wash
Is the Bond Bites series the 'shorts'?
Hi Ellen - The Bond-Bites are for those who've signed up for our mailing list on our website: www.diamondnestegg.com (so they are different from the shorts). We also posted them in the UA-cam member-zone when they first launched awhile back, but I will ask Eva/Caitlin to repost in the member zone again later today, so you don't need to sign up for our mailing list if you don't want to - we all get enough emails as it stands now! Best - Jennifer
Don't know how I overlooked that but I am signed up now. Thanks!
Just keep the duration short, I'm keeping it less or equal to 6 months.
Correct. And yield curves are still inverted.
Trust Yellen?
I'm new to bond investing, so I hope someone here with experience can help me learn something. Around January 1 of this year I bought some bond ETFs (AGG, BND, QLTA, JNK) and have held them until now.
I understand that when the interest rates rise, the price of bonds drop. So, I would expect if the rates drop a given percentage that the price of the ETF would rise in some relationship to that. If so, is it directly proportional? For example: The yield on a certain ETF is 5% and it drops to 4.5% (10% change). Will the price of this ETF which was $100 then increase to $110 (10% change)? If that continues, over time, you will earn gradually less on the yield payment and make capital gain on the price increase of the ETF when you sell it. Do these gains and losses equal to the same dollar amount over time (1:1 proportion)? If so, how do you come out ahead overall this way?
Is it better take this investing approach, or would it be smarter to buy t-bills or money market funds and know that the price is not going to change, but the interest rate may change. I hope this makes sense. Thanks.
When your printing 60> billion of new debt. weekly. How can the anyone/government expect to control inflation with interest rates?
Consumers need to stop spending like there’s no tomorrow and need to stop being addicted to self gratification while blaming government or externalities (economic shocks, etc). Government spending, if spent on improving long term productivity and in support of improving the well-being of the population is ok. Improved productivity is the key. Just like any business, you have to spend and go into deficit every now and then as you reinvest in newer technologies, infrastructure, social programs, etc.
Are banks in such distress that they have to buy these of their balance sheets?
I was thinking along the same line.
this year sounds scarier than most of the previous years?
While the US economy and Wall Street are not the same thing - the economy is in real trouble. In the not too distant future, it will hammer the stock market.
Selling $1T in debt every 100 days is unprecedented in our history.
November 5th is important…..
Indeed and we have a justice system that is rigged. I see very bad things coming in the near future.
Credible threat, they hope someone will step in a buy.