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Email this4:16 am
August 30, 2023
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Norman1 said
zgic said
Does RBC Direct Investing Offer US Treasuries?
Am I better off moving from ISA to US Treasuries as they will offer better yields? USD ISA currently offers 3.40%
I don't know if RBC Direct Investing offers US treasury bonds in its bond inventory or not.
BMO InvestorLine does. One can get a bit better than 3.4% at BMO InvestorLine through US treasury bills 69 days or longer:
DaysPriceYield
(semi-annual)Yield
(annual)
US GOVT TBILL 29SEP261899.842 U3.143.165
US GOVT TBILL 01OCT262099.821 U3.2023.228
US TBILL RE-ISSUE 07/3 29OCT264899.547 U3.3843.413
US GOVT TBILL 10NOV266099.442 U3.3393.367
US GOVT TBILL 19NOV266999.345 U3.4113.44
US GOVT TBILL 27NOV267799.260 U3.4563.486
US GOVT TBILL 08DEC268899.161 U3.4323.461
US GOVT T.BILL 24DEC2610498.979 U3.5393.571
US GOVT TBILL 21JAN2713298.699 U3.5633.595
US GOVT TBILL 18FEB2716098.418 U3.5853.617
US GOVT TBILL 18MAR2718898.150 U3.5773.609
US GOVT TBILL 15APR2721697.862 U3.6093.641
US GOVT TBILL 13MAY2724497.571 U3.643.673
US GOVT TBILL 10JUN2727297.284 U3.6623.695
US GOVT TBILL 08JUL2730096.945 U3.7463.782
US GOVT TBILL 05AUG2732896.633 U3.7883.824
Thanks Norman1.
What is the commission to buy and sell US treasury bonds in BMO Investorline?
8:42 am
April 6, 2013
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Bond trading commissions at BMO InvestorLine vary. The commission, included in the price, is disclosed when one places the order. It is an undisclosed formula.
I've seen as low as $0 per $1,000 bond and high as $3 per bond. I tried one of the US treasury bills and the commission was 20¢ per US$1,000 treasury bill.
Those quotes and yields from BMO InvestorLine include the commission. In contrast, Scotia iTRADE bond quotes and yields don't include the commission. With Scotia iTRADE, one needs to add the $1 per $1,000 commission ($24.99 minimum, $250 maximum) and recalcuate the yield.
9:10 am
October 27, 2013
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As an FYI, when I used to buy bonds at Scotia iTrade, I always bought face value of $25k or more, so my rule of thumb would be a 0.1% drop in posted Ask yield due to the $1/1000 commission, and effectively nothing as I would almost always buy ~5 year terms.
Bonds are one area where the discount brokerages have not 'given in' yet on reduced, i.e. $0-10 commissions, perhaps because there is little to zero fintech competition. It is a bit of a PITA because I assume they make something off the Bid-Ask spread.
10:14 am
April 6, 2013
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The disclosed commission is in addition to the undisclosed bond desk markup/spread.
For a five-year bond, a $1 per $1,000 commission will reduce the yield to maturity around 0.1%/5 = 0.02%. The impact is quite substantial for a 60-day bond: around 0.1% / (60/365) = 0.6%.
That's likely why Scotia iTRADE was quietly not charging any commission on small buy orders of short term bonds.
Also, money in US treasury bills is not considered to be "on deposit". Maturing bills will trigger a capital disposition and foreign exchange capital gains/losses even when they are rolled over to newer US treasury bills.
6:06 am
August 30, 2023
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AltaRed said
As an FYI, when I used to buy bonds at Scotia iTrade, I always bought face value of $25k or more, so my rule of thumb would be a 0.1% drop in posted Ask yield due to the $1/1000 commission, and effectively nothing as I would almost always buy ~5 year terms.Bonds are one area where the discount brokerages have not 'given in' yet on reduced, i.e. $0-10 commissions, perhaps because there is little to zero fintech competition. It is a bit of a PITA because I assume they make something off the Bid-Ask spread.
Thanks AltaRed.
Why would you buy only 5 year term bonds? Is it just because of yield?
What I was reading on chatgpt is that a shorter duration is better, if we intend to sell before maturity. Less interest rate sensitivity.
8:07 am
October 27, 2013
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What I said was ~5 year terms (meaning approximately 5 years). I have bought at lesser terms as well but anything below 2-3 years likely wouldn't make sense with the commission and Bid/Ask spread. I felt the higher yield at ~5 years was a reasonable trade off for the likely ~5 year commitment and potential exposure to interest rates.
I am not so sure that would be what I would do today due to more 'volatility' in the bond yield curve, due primarily I believe to the absurdity and unpredictability of the nut job in the White House these days. I would likely be going shorter rather than longer albeit the bond yield curve is steepening making longer term bonds more attractive again just because of the antics of the White House.
FWIW, I never purchased a bond with a likely intention of needing to sell it before maturity due to being at the mercy of the dealer's Ask spread and thankfully never had to do that.
FWIW2, I was a buyer of BBB/BBB+ credit rated corporate bonds from the likes of 'cash flow predictable' firms like pipeline and utility companies, least likely to go insolvent in that credit rated space. Going 'long' in that credit rated space gets more uncomfortable.
6:14 am
August 30, 2023
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AltaRed said
What I said was ~5 year terms (meaning approximately 5 years). I have bought at lesser terms as well but anything below 2-3 years likely wouldn't make sense with the commission and Bid/Ask spread. I felt the higher yield at ~5 years was a reasonable trade off for the likely ~5 year commitment and potential exposure to interest rates.I am not so sure that would be what I would do today due to more 'volatility' in the bond yield curve, due primarily I believe to the absurdity and unpredictability of the nut job in the White House these days. I would likely be going shorter rather than longer albeit the bond yield curve is steepening making longer term bonds more attractive again just because of the antics of the White House.
FWIW, I never purchased a bond with a likely intention of needing to sell it before maturity due to being at the mercy of the dealer's Ask spread and thankfully never had to do that.
FWIW2, I was a buyer of BBB/BBB+ credit rated corporate bonds from the likes of 'cash flow predictable' firms like pipeline and utility companies, least likely to go insolvent in that credit rated space. Going 'long' in that credit rated space gets more uncomfortable.
I have never done a GIC for more than 2 years. And currently it looks like being short is the right thing to do.
I did a 2 year GIC just 1 week back at 3.82% and today I can get a 2 year GIC for 4.06%.
I am little bit surprised how the market is still not panicking. Might be it takes a little while for it to digest.
8:39 am
September 7, 2018
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zgic said
I have never done a GIC for more than 2 years. And currently it looks like being short is the right thing to do.
I did a 2 year GIC just 1 week back at 3.82% and today I can get a 2 year GIC for 4.06%.
I am little bit surprised how the market is still not panicking. Might be it takes a little while for it to digest.
Panicking? Why should there be a panic? When investors stick to a plan, stay the course and not "panic" things ultimately do just fine. Day to day gyrations should be ignored.
3:28 pm
October 27, 2013
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zgic said
I am little bit surprised how the market is still not panicking. Might be it takes a little while for it to digest.
Perhaps be a bit more specific about 'from what'? And which market, i.e. equities (stock market)? If so, which one (US or ?). Or bond markets?
If stock market, then a 10 year look at the S&P500 price only (not including re-invested dividends) is here https://www.macrotrends.net/24.....aily-chart The 1Q25 correction (greater than 10% decline) was a result of the Trump win and his tariff policies, but it recovered quickly. Even the Iran war earlier this year didn't do much for long.
The biggest one was the 2022 bear (>20% drop) what went from top on Jan 3, 2022 and bottomed Oct 12, 2022, and recovered fully by end of 2023 (two years top-to-top not including dividends). That was a direct effect of the rapid steep increases in interest rates to fight inflation PLUS the Russian invasion of Ukraine that resulted in sanctions and disruptions in oil supplies (high prices).
Can we learn anything from them for the immediate future? Only that perhaps a correction (greater than 10%) might be on its way due to high oil and nat gas prices impacting consumer spend and squeezing corporate earnings. That isn't a panic any more than any previous blips were a panic. Probably minimal impact until investors get to see the results of the mid-terms in about 6-7 weeks.
6:02 am
August 30, 2023
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Norman1 said
I don't know if RBC Direct Investing offers US treasury bonds in its bond inventory or not.BMO InvestorLine does. One can get a bit better than 3.4% at BMO InvestorLine through US treasury bills 69 days or longer:
DaysPriceYield
(semi-annual)Yield
(annual)
US GOVT TBILL 29SEP261899.842 U3.143.165
RBC DI doesn’t show US Treasuries online. I called them and they said they do sell them.
The only way I could compare would be to get a BMO IL account, now that it is 0 commission. But wanted to avoid having 1 more account.
Do you think the rates would be much different between RBC or BMO on US Treasuries?
I was thinking of moving some funds from QUESTRADE USD ISA to some higher yielding US Treasuries. Any thoughts?
7:18 am
October 27, 2013
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I avoid proliferation of accounts like the plague, so from my POV, I wouldn't do that sort of thing. My objective in my old age is the KISS principle.
7:36 am
April 6, 2013
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Yes, one needs to have multiple brokers if one is shopping around for bonds.
One is buying pre-owned bonds out of an inventory. Like buying used cars!
The inventory, markup, and commissions vary. All those bankers acceptances and Quebec municipal bonds I bought through BMO InvestorLine weren't even available at Scotia iTRADE.
BMO InvestorLine doesn't have minimum commission or a fixed commission for bonds. That often results in better yields than Scotia iTRADE's $1 per $1,000 bond, $24.99 minimum per order.
