How to Buy and Sell U.S. Treasuries at Fidelity
If you’re in the market for U.S. Treasury bonds, you really need to check out the selection that Fidelity Investments offers. With up-front pricing and user-friendly tools, trading government debt is a breeze. Here is the step-by-step process to get started:
Step 1: Educate Yourself
Before you jump into the world of fixed-income securities, you’ll want to be sure that you have an understanding of their characteristics. Fidelity has a very extensive learning section on its website. To find it, point your cursor to ‘News & Research’ in the top menu and select ‘Learning Center’ from the drop-down list of options.
Under ‘Investment product’ click on ‘Fixed Income & Bonds.’ On the next page, you’ll find a large selection of topics. These are arranged by experience level and media type (article, video, course, or webinar). We found resources on bond ratings, prices, yields, and investment strategies.
Step 2: Use the Broker’s Screener
Once you have a good understanding of the risks and benefits of bonds (including sovereign debt), it’s time to break out Fidelity’s fixed-income screener and locate some Treasury bonds. To find the broker’s bond screener, click on ‘News & Research’ in the top row and select ‘Fixed Income, Bonds & CD’s.’
The next page will contain the debt screener. Horizontal rows show many different types of bonds, including corporate, municipal, and agency securities. U.S. Treasury debt is near the upper portion of the screener, and underneath the Treasury row is a row for zero-coupon Treasury bonds.
Vertical columns splice bonds into maturity dates, and this produces yields. Click on whichever maturity and yield you’re interested in.
Step 3: Make a Selection
After clicking on a link, you’ll get a large selection of individual bonds. Fidelity displays a lot of helpful information on this page. Each row is one bond, and within the row you’ll find the bond’s credit rating (AAA for Treasuries), the coupon rate, the maturity date, the current yield, yield to maturity, yield to worst, and the current price (bid and ask). These columns can be sorted if you want a certain coupon or maturity. The results can be downloaded to an Excel spreadsheet.
A depth of book icon is displayed in each row as well. This shows you recent trades of a specific bond. There are prices, yields, and quantities.
On this page, there’s also a link to a piece-yield calculator. This is a nice little tool that determines yield to maturity and yield to call based on purchase and call prices.
A second calculator (also linked on the results page) is a taxable-equivalent yield calculator. After you input your tax filing status, state of residence, yield, and bond type, the tool will calculate tax-equivalent yields for a variety of securities, such as in-state and out-of-state muni bonds.
If you click on the bond’s name, you’ll get some very important information you need to take a look at before placing a trade. This includes the coupon frequency (such as semi-annually, as most Treasuries are), the CUSIP number, the call status, and the minimum investment quantity.
Price and performance information are also shown. This will give you a Treasury benchmark yield on the same maturity and complex analytics. These include option adjusted convexity, duration to worst, and convexity to worst.
Step 4: Place a Trade
When you’ve decided on a specific bond, there are buy and sell buttons next to the bond’s name. Only limit orders are accepted, and the only time-in-force option is fill or kill. On the order ticket, too, you can find the same vital data and depth of book we mentioned in the previous section. You’ll need to enter the quantity of bonds you want, and this of course must meet the bond’s minimum. Amazingly, Fidelity doesn’t charge any commissions or markups for Treasury bonds.
Step 5: Don’t Forget Bond Funds
If searching for an individual bond becomes too daunting of a task for you, you could alternatively invest in a Treasury bond fund. Many can easily be found using Fidelity’s mutual fund screener. Just specify taxable bond and then choose government debt. We found PFGAX, PIMCO’s Long-Term U.S. Government Fund. It carries no transaction fee, but has a 3.75% load on the front end. It contains many U.S. Treasury bonds.
Better Alternatives
For bond investing we recommend a broker called Ally Invest: see
Ally Invest Buying Treasuries.
For a completely commission-free investing the best option is
Firstrade (read review).
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