In some of my accounts and some other accounts I manage, I’ve basically set up rolling Treasury Bill ladders, generally with shorter term maturities. Before recent yield curve shifts, I had been buying out to about 13 week maturities, but lately the longest I’ve been going out is 8-10 weeks. My last purchase of a 13w was the 12/18/25 Bill at a yield of 3.97% on 09/17/25. This week I’ve I bought mostly the 11/18/25 (maturity 7.7 weeks as of today) at a yield of about 4.05% in most accounts with Bills maturing yesterday (Tuesday) or tomorrow (Thursday).
Here are some yield curves to illustrate my approach. I’ll start with the overall Treasury yield curve, then drill down to the short end of the T Bill curve.
Note: This yield curve is constructed from Schwab ask quotes. Unlike Fidelity, Schwab does not include STRIPS in its bond search results for Treasuries–it has a separate filter for Treasury Zeros. Also unlike Fidelity, Schwab does include TIPS in its default Treasury search results, but with the minimum vertical axis value at 3.25 (percent), they do not appear in the yield curve shown.
We see that the yield curve is inverted at the short end. Bills are included in the segment up to the first minor horizontal gridline, representing 1 year maturity. Notes and bonds also are included in this curve, which is why we see some outliers on the low side; these are for bonds with large coupons (some greater than 6.5%).
Here’s the full Treasury Bill yield curve; I filter the Bills from the full Treasury download using the CUSIP root = 912797 as the filter condition.
Since I’m interested in the short end of the Bill yield curve, I construct charts just for those:
Note: The numbers (series labels in Google sheets chart terminology) represent day of the week (with Monday = 1), so mostly Tuesday and Thursday representing the default issue/maturity day for 4/8 week and 13 week Bills respectively. The other numbers, 3 or 5, are due to a holiday falling on the default maturity or issue date. I added these labels because I found the sawtooth pattern for Tuesday and Thursday maturity days interesting.
I notice certain peaks before subsequent yield declines; e.g., about 6, 8 and 9 weeks. The one at about 8 weeks is the 11/18 that I’ve been buying most recently.
According to the expectations hypothesis, rolling a 4-week or 13-week Bill for 52 weeks has the same expected return as holding a 52-week Bill to maturity. So this theory indicates that an inverted yield curve, as we have at the short end now, means that investors believe that short-term rates will decline, which of course is consistent with expectations of more Federal funds rate cuts over the coming year.
Someone who prefers less price risk and more reinvestment risk should favor shorter maturities, and those who prefer less reinvestment risk should favor the longer end of whatever yield curve we’re considering.
My personal intuition is that there could be more economic uncertainty than the stock or bond markets seem to be pricing in, so I lean toward the short end of the curve. Also, I prefer TIPS for any maturity longer than a year or two, since I have an aversion to unexpected inflation risk.
