US Treasury: What Is It and How to Trade in Singapore
Key takeway
The data of the US PCE inflation index exceeded market expectations, which consolidate the anticipation of US Fed rates cut in June. Concerning the potential drop in yields for money market funds, US Treasuries may be a new investment option that generates consistent coupon payments.
In this article, we will dive deep into the following questions:
What are US treasuries and what does it mean for investors?
What is the advantage of US Treasuries comparing others investment products?
How to trade US treasuries on moomoo?
What is US Treasury
1.1 What are the US Treasuries?
US Treasuries are debt securities published by the US government to raise funds for government operating expenses and debt repayment etc.. US treasuries are considered to be one of the most liquid and high credit quality investments available globally. It is regarded as an important choice for safe-haven investing and a way to incerease passive income.
1.2 Types of US Treasuries
Type of US Treasuries | Holding Period | General Auction Timing | Coupon Frequency | Features |
U.S. Treasury Bills (T-Bills) | Within 1 year | 4week；13week；26week；52week | No dividends before maturity | Discount directly when buying, and receive full amount on the expiration date. |
U.S. Treasury Notes (T-Notes) | Within 10 years | Monthly publishing Years 2、5 and 7： | Dividends are paid every 6 months | - The most important type of public debt. |
U.S. Treasury Bonds (T-Bonds) | 10-30 years | 10 years; 20 years; 30 years, published monthly | Dividends are paid every 6 months | Holders will be paid at par value with the last installment of interest. |
Treasury Inflation Protected Securities (TIPS) | 10-20 years | 5 years；10 years；20 years | Dividends are paid every 6 months | Principal is adjusted by inflation or deflation. |
Advantages of US Treasuries
2.1 What are the benefits of buying US bonds?
Security: since US Treasuries are issued by the government, they basically have the guarantee of credibility and ability to repay debts. Therefore, U.S. Treasuries are generally regarded as "non-default" bonds and have the reputation of being one of the safest investment vehicles in the world.
Stable returns:US Treasuries generally pay fixed dividends twice a year, providing investors with a steady cash flow.
Risk diversification:US Treasuries are combined with other investment assets (stocks etc.) to balance risk and return.
2.2 Risk and return comparison of US Treasury bonds and other investment products
We used a table to compare US treasuries, Singapore government bonds and Moomoo Cash Plus, which you can use as a reference.
SGS / US Treasury / Cash Plus at a Glance | |||
US TREASURY | SGS BONDS | Moomoo Cash Plus | |
Overview | US Treasuries are government debt securities | Medium to long-term, tradable government debt securities that pay a fixed coupon every 6 months. | Cash Plus offers investors a relatively low-risk investment vehicle with relatively stable returns. It consists mainly of money market funds investing in fixed deposits and cash markets. |
Available tenor | 1，2, 5, 10, 15, 20, or 30 years | 2, 5, 10, 15, 20, 30 or 50 years | Can be held for any length of time |
Yield | 5.28%* YTM | 3.45% * | 5.26%* |
Volatility | Guaranteed fixed coupon until maturity | Guaranteed fixed coupon until maturity | Yield fluctuates with the market |
Example | Invest US$20k, with a 10 Year Maturity date and coupon rate of 4.5% p.a. | Invest $20k, with a 10 Year Maturity date and coupon rate of 3% p.a. | Invest S$20k MMF and convert your holdings based on the NAV of the fund on the subscription date. If you redeem after 1 year of holding, the redemption amount is then calculated based on the NAV and the holding shares at the time of redemption. |
Minimum investment amount | US$1,000, and in multiples of US$1,000 | S$1,000, and in multiples of S$1,000 | S$0.01 |
Trade US Treasury with moomoo
From now until 30/06/2024, trading US Treasuries on Moomoo SG will be 0* commission. Take advantage of the current higher interest rates environment where selected US treasuries are offering 5%^ yield to maturity. Before trading US Treasuries, please confirm that you created a Moomoo SG universal account.
Step 1: [US Treasuries selection]
Click Wealth > Bonds > US Tresearies on the homepage of moomoo App to view all US Treasuries.
Step 2: [Place Order]
Select the US Treasury you want to trade > Buy > Enter the value and bid price > Click the Buy button again > Purchase confirmation.
Step 3: [Sell] If you want to sell the bonds you hold
Find the bonds you hold in the position list > Click Sell > Enter the value and bid price > click the Sell button again > wait for the order matching successfully.
Moomoo SG has now launched a limited-time 0* commission campaign for US treasuries trading. Don't miss this opportunity, open the moomoo app and start your journey of US treasuries trading!
Please note that before trading, ensure that you are aware of all relevant fees and terms and conditions.
5% YTM is based on returns on selected US treasuries, moomoo app data as of 18/03/2024. Actual YTM may differ. To earn the YTM (Yield To Maturity) as indicated at the time of purchase, you must hold the bond until its maturity date. *0 commissions for US Treasuries will be waived until 30/06/2024. T&Cs and other fees apply.
In Singapore, Moomoo SG will act as your agent when providing services of U.S. Treasuries to you.
This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. Read more