The 31st is the settlement date, not the date on the auction (23rd). Which of the two does the liquid cash need to be present? My experience buying non-TIPS at auction through Schwab is that they suck-out the money on the auction date and doesn't start earning/appreciating until the settlement date leaving the cash earning nothing during that period in limbo. This really dilutes the earnings on a short term (4 week) Treasury.Because it is the original auction for an issue, rather than a reopening, it is almost certain that the price for the principal will be at most the par amount. The price will be higher than par when the high yield of the auction is less than 0.125%.So, say I wanted to buy $50k of TIPS. I would enter “50” at Schwab (50 X $1,000), but my purchase price might not be exactly $50k? How much buffer should I have in my settlement fund so the transaction will execute at the end of the auction? And I assume that amount is deducted when the trade closes either on or the day after the auction?
The bottom line amount paid will also include accrued interest. With the auction held a year ago, the accrued interest was 0.76843 per $1,000 of par amount.
The bottom line amount to be paid needs to be available in your account on the issue date of the auction, January 31, 2025 in this case.
Statistics: Posted by samsoes — Thu Jan 16, 2025 6:49 pm — Replies 32 — Views 1804