What are the current T bill discount rates 1 month?
Basic Info
The bank discount rate refers to the interest rate an investor will receive for investing in short-term money market instruments such as Treasury bills and commercial paper. By calculating the bank discount rate, an investor can determine the net gain they'll earn on their investment if they hold it until maturity.
We sell Treasury Bills (Bills) for terms ranging from four weeks to 52 weeks. Bills are sold at a discount or at par (face value). When the bill matures, you are paid its face value. You can hold a bill until it matures or sell it before it matures.
6 Month Treasury Rate is at 5.40%, compared to 5.41% the previous market day and 5.05% last year. This is higher than the long term average of 2.83%. The 6 Month Treasury Bill Rate is the yield received for investing in a US government issued treasury security that has a maturity of 6 months.
| 1 Month Treasury Rate | 5.48% |
|---|---|
| 1 Year Treasury Rate | 5.21% |
| 10 Year Treasury Rate | 4.67% |
| 10 Year-3 Month Treasury Yield Spread | -0.79% |
| 10-2 Year Treasury Yield Spread | -0.29% |
The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility—the discount window.
To calculate the price, take 180 days and multiply by 1.5 to get 270. Then, divide by 360 to get 0.75, and subtract 100 minus 0.75. The answer is 99.25. Because you're buying a $1,000 Treasury bill instead of one for $100, multiply 99.25 by 10 to get the final price of $992.50.
Liquidity: CDs are not liquid accounts; the money is locked until the CD's maturity date, or you'll have to pay hefty penalties. T-bills provide more liquidity; they can be sold if you need cash fast.
The 3-Month Treasury bill is a short-term U.S. government security with a constant maturity period of 3 months. The Federal Reserve calculates yields for "constant maturities" by interpolating points along a treasury curve comprised of actively traded issues of term (e.g., 1 month) maturities.
There is virtually zero risk that you will lose principal by investing in T-bonds. There is a risk that you could have earned better money elsewhere. Investing decisions are always a tradeoff between risk and reward.
What day of the week should I buy Treasury bills?
Treasury Bills
Except for holidays or special circ*mstances, the offering is announced on Tuesday, the bills are auctioned on Thursday, and they are issued on the following Tuesday.
The shorter terms to maturity differentiate them from other Treasury-issued securities. While interest rates and inflation can affect Treasury bill rates, they're generally considered a lower-risk (but lower-reward) investment than other debt securities.
Key Takeaways
Interest from Treasury bills (T-bills) is subject to federal income taxes but not state or local taxes.
Basic Info
1 Year Treasury Rate is at 5.21%, compared to 5.21% the previous market day and 4.78% last year. This is higher than the long term average of 2.95%.
To calculate yield, subtract the bill's purchase price from its face value and then divide the result by the bill's purchase price. Finally, multiply your answer by 100 to convert it to a percentage.
| This Week | Month Ago | |
|---|---|---|
| Ten-Year Treasury Constant Maturity | 4.61 | 4.36 |
| 182-day T-bill auction avg disc rate | 5.16 | 5.125 |
| One-Year MTA | 5.114 | 5.114 |
| Two-Year Treasury Constant Maturity | 4.86 | 4.7 |
The Bloomberg 1-3 Month U.S. Treasury Bill Index (the "Index") is designed to measure the performance of public obligations of the U.S. Treasury that have a remaining maturity of greater than or equal to 1 month and less than 3 months.
- Discount Yield = [(10,000 - 9,950) / 10,000] x (360/90) = 0.02, or 2%
- Investment Yield = [(10,000 - $9,950) / $9,950] x (365/90) = 0.0204 rounded, or 2.04%
Bills are short-term securities that mature in one year or less. They are sold at face value (also called par value) or at a discount. When they mature, we pay you the face value. The difference between the face value and the discounted price you pay is "interest."
The discount rate is the interest rate used to determine the present value of future cash flows in a discounted cash flow (DCF) analysis. This helps determine if the future cash flows from a project or investment will be worth more than the capital outlay needed to fund the project or investment in the present.
What is an example of a discounted interest rate?
For example, $100 invested today in a savings scheme with a 10% interest rate will grow to $110. In other words, $110, which is the future value (FV), when discounted by the rate of 10%, is worth $100 (present value) as of today.
They are sold at a discount to face value, and the difference between the discounted price and face value is your return on investment. For example, if you buy a 12-week T-bill with a face value of $10,000 for $9,800, the difference of $200 is your return for holding the security for 12 weeks.
The only interest payment to you occurs when your bill matures. At that time, you are paid the par amount (also called face value) of the bill. (Bills are typically sold at a discount from the par amount, and the difference between the purchase price and the par amount is your interest.)
You can buy (bid for) Treasury marketable securities through: your TreasuryDirect account — non-competitive bids only. a bank, broker, or dealer — competitive and non-competitive bids.
T-bills pay a fixed rate of interest, which can provide a stable income. However, if interest rates rise, existing T-bills fall out of favor since their return is less than the market. T-bills have interest rate risk, which means there is a risk that existing bondholders might lose out on higher rates in the future.
