Buying T-Bills: Can’t Back Out After Rate Announcement

One bad thing about purchasing Treasury Bills at TreasuryDirect is that you don’t know the exact return of the T-Bill before you buy it. An interesting idea around this was presented by commenter Dan when I first posted about buying T-Bills:

You don’t have to commit until you know the price. 1. Schedule the transaction. 2. The auction will be on Monday for 3- or 6- month T-bills and Tuesday for 1-month T-Bills. 3. On Wednesday, look at your pending transactions. … At the bottom of the page, you have two button options. … “Delete” (which I assume means cancel the transaction, though I haven’t done it myself).


In other words, they seem to offer you the option to cancel the purchase after the rate announcement, possibly giving you the ability to see the rate before committing to the purchase. Nobody else seemed to have actually tried it, so I volunteered as the guinea pig. I scheduled two $1,000 4-Week T-Bill purchases for the the 11/22 auction date today (11/25 issue date).

And? Good idea, but no dice. I tried to cancel the transaction at noon today soon after the rate announcement, and it gave me the following error even though the Delete button was available:

We are unable to delete this transaction, because it is currently being processed.

So now we know – and it looks like I’ll be buying $2,000 of T-Bills this week. No big deal – the rate dropped a bit to 3.940%, but that’s still 4.48% equivalent return for me. I’ll also get to verify if you can fund your purchase directly from Emigrant Direct, but I think someone else already did that successfully.

Comments

  1. Yes, I have my TreasuryDirect account setup to fund from my EmigrantDirect and it worked just fine.

    Neo

  2. Well I stand corrected! Thanks for testing it out!

    - Dan

  3. What happens if you try to delete today? The day after the auction. Worth a try. It doesn’t fund til Friday.

  4. Dan – No problem, it was a good idea!

    mc – Just tried it again, same error. Ah well =)

  5. Then what’s the DELETE button for? I would email the Treasury and see what they say about backing out before funding is completed.

    P.S. The minutes from the last Fed meeting that were released yesterday said the Fed may be done raising rates. That should mean short term rates are headed down or at the least will remain flat. We shall see.

  6. I think the Delete button is always there (that’s what I used to try and cancel), it just doesn’t work after the rate is announced.

  7. Thanks for checking into this. Love the little guinea pig icon too ;)

  8. How do you setup your Treasury Direct account to debit from your Emigrant Direct account? I only have the account number and don’t know where to find the routing number. Thanks!

  9. Of course you can’t back out after the auction. After all, the auction price is based on demand. So if everyone was able to back out after the auction price was established, then the price would have to change again.

    I don’t see this as an issue because the treasury bills prices (on the secondary market) are published daily, so you can look the previous days price. It won’t fluctuate that much from day to day, maybe 2-3 basis pts. Still far better than CDs even if it drops 10 basis pts.

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