Study Notes:
The US Treasury market is perhaps the most liquid market in the world on account of its size and demand for the safety of debt issued by the government of the world’s largest economy. IBKR clients can add predefined watchlists to their Trader Workstation or TWS and can add specific securities to their Monitor panels to view quotes for securities that they care about.
Defining US Treasuries Bills, Notes, & Bonds
Let’s first add some definition to maturities. When the government issues debt securities, they generally always have a maturity date. The maturity length determines whether the debt is known as a bill, note or bond. Bills generally have a maturity of less than one-year. Bills are generally issued at a discount and carry no coupon. Because they are issued at a discount to par, they imply a rate of interest, which the holder receives at maturity. Notes have maturities or greater than one-year, but less than 10-years. Bonds have maturity dates longer than 10-years. This is important when using filters on government debt.
The US Treasury issues short-term and long-term debt via Primary Dealers and to the investing public via Treasury Direct.
Displaying a US Treasury contract in TraderWorkstation
There are several ways to display a specific US Treasury security.
If the investor knows the ISIN – the Treasuries’ unique identifier, they can add that to a cell in the TWS Watchlist or directly into the TWS Order Entry panel.
However, it’s more likely that the investor will want to filter by a specific maturity date to locate a certain bill, note or bond.
Searching for a US Treasury contract in Trader Workstation
IBKR clients can access quotes and may trade bills, notes and bonds using TWS by entering the term ‘US-T’ then clicking on Government Bonds under US Treasury. A Contract Selection page will display. The aim here is to narrow down the search to the most useful information.
Under the Exchange display in the upper left corner, select SMART. In the lower left corner, eliminate non-tradable bonds by selecting “Yes” from the Tradable selection box.
There are four additional filters in the left-hand column that will help narrow down a search.
- Type: the investor can select Bills, Notes, or Bonds.
- Maturity Date
- Issue Date
- Coupon Rate
Clicking the “Clear” button at the bottom of the screen will reset all the filter choices.
If the investor wants to monitor multiple securities expiring within a broad date range, these can be selected from the Contract Selection tool. For example, a note investor might want to add several 10-year notes with the farthest possible maturity dates. Having located them by selecting SMART, Notes and selecting Tradable from the left columns, the user may scroll down to the bottom of the Contract Selection array of results, and use the CTRL and SHIFT keyboard keys to highlight the desired selection. Click Add to add to the active Watchlist and OK to close the Contract Selection tool.
The Watchlist now displays the selected notes. Users may wish to Configure their Watchlist to include Bond specific items, such as bid yield, ask yield etc. by clicking on the gear icon in the top right-hand corner of the Watchlist and choosing “Settings”.
Buying a US Treasury contract in TWS
Click on a specific bond to add it to the Order Entry panel.
Click the Buy button.
By default, TWS displays the minimum quantity that could be purchased. Change the Quantity field to your desired amount. Bonds are typically issued with $1,000 par or face value.
From the Order Type dropdown menu choose between Limit and Market order types. Because certain exchanges to which treasury orders may be routed do not accept market orders, we always recommend specifying a Limit price and entering a maximum price that you are prepared to pay for the bond.
When the investor is satisfied with their order, they click Submit in the lower right corner. An order confirmation screen will appear, once reviewed the investor can click Transmit. The live order will appear in the Activity panel below on the Orders tab, where the user may adjust the price and quantity or cancel the order altogether.
Selling a US Treasury contract in TWS
Long positions can be sold in a similar manner. From the Portfolio tab click on the bond, which will cause it to populate the Order Entry panel. The user clicks the Sell button and enters a Limit price before clicking the Submit button.
Short Selling US Treasuries in TWS
To create a short position in a US Treasury security, identify the bill, note or bond to sell short such that it also populates the Order Entry panel. For short sales, there is an additional volume qualifier. In order to enter a short position, the user must specify a quantity minimum of $250,000 and incremental volume of a further $250,000. That means that short sales would be for at least 250 bonds, with additional increments of 250 bonds.
From the Order Entry panel with the bond loaded, the user clicks the Sell button, specifies a quantity to satisfy order minimum and incremental size, and enters a limit price before clicking Submit.
Additional Information:
Users may also enter orders for TIPS and Strips for bills, notes and bonds for both interest and for principal amounts.
IBKR Bond Scanner – Users can scan for US Treasuries by type, maturity date range and additional category from the IBKR Bond Scanner. To access from the New Window button to the upper left of TWS, from the Scanners expansion menu select Bond Scanner.
Predefined Watchlists – Users may also add key US Treasury yield data to a watchlist using on-the-run treasury prices. In the Monitor panel, locate and click the ‘+’ icon to the right of the open watchlists.
Select Predefined Watchlists. Locate and select US Treasuries (on-the-run) to add this to your available Watchlists.
Configuration: To add column data to a Watchlist, hover above the column-header, right-click and select Manage Columns. From the right column in the display menu search for desired terms and add them to the Displayed Column from the Available section.
Are there commissions when buying or selling US Treasuries?
Thank you for asking, Peter. Yes, if you trade US Treasuries with IBKR, there will be commissions. You can find more details here and you may want to review United States – Examples: https://www.interactivebrokers.com/en/pricing/commissions-bonds.php?re=amer
Are there US T-Bills 4-week? I can’t find them. Thanks
Hello Mike, thank you for asking. You can view all the available products on our platforms here: https://ndcdyn.interactivebrokers.com/en/trading/products-exchanges.php#/. In TWS, you can also right click on a blank line from your Watchlist and choose “Treasury Bond Selector”. Then, choose a contract to add to your Watchlist. Furthermore, you can enter the symbol “US-T” to your Watchlist or Order Entry window to add the US Treasury you wish to trade. We hope this helps!
What happens at maturity of a t bill in my ibkr account? Does it disappear and face value is added to cash automatically?
Hello Serkan. When a T-Bill matures the cash proceeds should be in the account the morning of maturity date. If you have any more questions, please ask. We’re here to help.
https://www.ibkr.com/faq?id=37134449
Hi, is it possible to buy T-bills directly through the client portal instead of the TWS? And is there a tutorial?
Thanks
Hello Nuno, thank you for reaching out. It is possible to buy T-bills directly through the client portal! You can quickly place an order within Portal by clicking the Trade tab > Order Ticket, or by clicking Menu in the top left corner > Trade > Order Ticket. You can enter or search for a symbol to find Treasury bills. You can change the product type by selecting a different tab (for example: Stocks, Options, Futures, etc.). We hope this helps! https://www.ibkrguides.com/clientportal/trade/trade-button.htm
Can non-competitive bids be placed in Treasury auctions?
Hello Dean, thank you for your question. IBKR does not offer access to Treasury auctions. Clients, however, may purchase Treasury securities once trading in the secondary market at one of the market venues listed on our website. https://www.interactivebrokers.com/en/trading/orders/auction.php
How does one transfer T-Notes or Bonds from Treasury Direct to IBKR account?
Hello Todd, thank you for reaching out. U.S. Treasury bills, notes, bonds, and TIPS are eligible for electronic transfer from Treasury Direct to your IBKR account via the commercial book-entry system. Please view the FAQ attached for instructions to transfer T-Notes or Bonds from Treasury Direct to your IBKR account. We hope this helps!
https://www.ibkr.com/faq?id=34499378
I wanted to buy US treasuries. After I entered the buy order I have this warning message that says it doesn’t meet minimum size for NBBO
What’s the minimum size for NBBO?
Hello Thor, thank you for reaching out. To view the minimum size in TWS, you can right-click the Financial Instrument, scroll down by clicking the down arrow, click Financial Instrument information, and click Details. You can then scroll down in the Client Portal. We hope this helps.
can I use IBALGO to order US-treasuries? When – according to the tutorial – I enter a limit order, then upon ordering I still get a warning note to set a price cap. Thank you
I cant’t find a way to use IBALGO for ordering US-treasuries when I use TWS – can you help
Hello, thank you for reaching out. At this time, you cannot use IBALGO to order treasuries. Please view this FAQ for instructions on how to trade U.S. Treasuries in TWS. We hope this helps!
One T bill ask price on IB app screen shows 99.298, I place buy limit order @99.3. After one hour still no transaction done. Should I wait? Or change to better liquidity t bill ?
Hello, thank you for reaching out. If you have an account-specific question or concern, please contact Client Services: http://spr.ly/IBKR_ClientServices
Hi, what happens when my T notes matures? Will the cash proceeds be sent to my IB account?
Hello, thank you for reaching out. When your T notes mature, the cash proceeds will reflected in your settled cash balance. We hope this helps!
What is minium size for buying US-T bills ? There is always a message pop up saying …it does not meet the minimum size requirement to trade in NBBO…… Where could I find the information of the minimum size of the US-T bills?
Hello, thank you for reaching out. To view the minimum size in TWS, you can right-click the Financial Instrument, scroll down by clicking the down arrow, click Financial Instrument information, and click Details. You can then scroll down in the Client Portal. We hope this helps!
Hi is there witholding taxes or any taxes on US Tbills for non US investors?
Hello Lee, thank you for reaching out. Securities issued on or after July 19, 1984, are not subject to withholding if you’ve filed a properly executed IRS Form W-8 with IB. Securities issued before July 19, 1984, are subject to withholding of 30 percent or the applicable treaty rate. We hope this helps!
Hello, what is the meaning of the number in the bond or note’s description? I don’t think that’s the yield. E.g. US Treasury 0.25 T-Note. They all have a number in the description, 0.25, 4.26…. and so on. Thanks
Hello Giulia, thank you for reaching out. The number in the description is the coupon rate. The coupon is the interest paid on a bond or Treasury note expressed as a percentage of the face value. Treasury notes and bonds pay interest at the coupon rate and return the capital when they mature. The frequency of interest payments can vary based on the specific bond or note. Please view this FAQ for instructions to see coupon information for a bond in TWS: https://www.ibkr.com/faq?id=84620230.
I’ve never bought a bond so I suppose these are newbie questions. I’m on TWS and selected the bond with the highest coupon, currently 7.625% (cusip 912810ET1). The entry in the watchlist shows a current yield of 7.374%, not 7.625% Why? The bid yield and ask yield are even worse with 4.604/4.318% I don’t understand. Also, the Bid Size shows $20,000K and the Ask Size currently also shows $20,000K, but sometimes the two numbers are different. Why? Does $20,000K really mean $20 million dollars?
Hello Greg, we appreciate your question. The bid and ask yield are the best indications of what the bond investor is buying. The coupon is fixed when the bond is issued and never changes. The bond’s price changes as does the surrounding market, but it’s coupon remains constant. As market conditions cause the price of the bond to go up and down, so does its yield. The bid and ask yields reflect changes in the market and indicate what yield the bond provides at its current price. The bid and ask sizes change constantly according to the best available prices from any market or venue to which we are connected. The ‘k’ stands for thousand, and so yes, $20,000k is indeed $20million.
This article may be a good resource for you: https://ibkrcampus.com/traders-insight/securities/fixed-income/what-are-bonds-your-2023-beginners-guide/
We hope this helps!
Why when i enter the order from the client portal i cannot find it after its filed?
Hello, thank you for reaching out. You can see a list of recent orders and their status as well as executed trades on the Orders & Trades screen in Client Portal. You can also modify or cancel orders that haven’t yet filled. Please view this FAQ for instructions to access this page in Client Portal: https://www.ibkr.com/faq?id=38453132
We hope this helps!