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Author: ayduda Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35392  
Subject: Re: "Rolling Down" the Yield Curve? Date: 5/11/2002 4:21 PM
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I have been thinking about the same thing.

One way to reduce the transaction costs is to buy the T-notes at auction. You can do this at most brokers for a small fee (Vanguard is $25 while Schwab/Fidelity charge $50).

The problem is the transaction cost at selling. Unless it's a fraction of a percent it will eat up most of the gain from rolling down the curve.

Another problem is the spread between CD and treasury note rates. For example, 2 year notes are yielding about 3.2% but I can find 2 year CD's yielding 4.4% (http://www.advantabankcorp.com/cd_h.htm).

Even with the gains from rolling down the curve and California income taxes, I don't think I can beat that.

ayduda
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