The interest rate on bank deposits is low, and many small partners choose to buy reverse repo of treasury bonds in order to take into account the safety and flexibility of investment. When it comes to reverse repo of treasury bonds, experienced partners will choose products with a 1-day period on Thursday, so that they can enjoy 3 days of excess returns. Why is this so? Let's take a look at the basic concepts, trading rules and calculation methods of treasury reverse repo to help you better understand and apply.
Treasury reverse repo, simply put, is a short-term loan. Investors lend their funds through the treasury bond repurchase market to obtain fixed interest income; The borrower (usually a financial institution) uses his or her own treasury bonds as collateral to obtain the loan, and pays the principal and interest when it matures. The security of reverse repo is relatively high, because the risk of default is extremely low because Treasury bonds are used as collateral. Next, we will focus on the trading rules and calculation methods of reverse repo of treasury bonds.
1. Trading Rules
1. Trading hours: Treasury reverse repo trading hours are usually the same as ** trading hours, that is, Monday to Friday from 9:30 a.m. to 11:30 a.m. and 13:00 p.m. to 15:30 p.m. It is important to note that the maturity date of a reverse repo is determined based on the term chosen at the time of purchase, not the trading date.
2. Trading varieties and periodsAccording to the different maturities, the reverse repo of treasury bonds is divided into multiple varieties, such as 1-day, 2-day, 3-day, 7-day, 14-day, 28-day, 91-day, and 182-day period. Investors can choose the right variety according to their capital needs and risk tolerance. It should be noted that **and Shanghai trading** are different.
3. Transaction methodsReverse repo of treasury bonds is usually traded through the ** exchange, and investors can open an account and buy and sell on the trading platform of the ** company, which is the same as the method of selling.
2. Calculation method
The calculation of reverse repo of treasury bonds mainly involves two aspects: one is the calculation of interest income, and the other is the calculation of maturity date.
1. Calculation of interest income:
The interest income of the reverse repo of treasury bonds is calculated based on the annualized rate of return at the time of purchase and the reverse repo period. The specific calculation formula is as follows:
Interest income = transaction amount annualized rate of return reverse repo period 365
Among them, the transaction amount is the amount of reverse repo of treasury bonds purchased by the investor, the annualized rate of return is the yield determined at the time of purchase, and the reverse repo period is the period (in days) selected by the investor.
It should be noted that the annualized yield of reverse repo of treasury bonds is variable, similar to **, and will be adjusted in real time according to the level of market interest rates. Therefore, investors should pay attention to the market interest rate and the yield of reverse repo varieties at that time when buying.
2. Calculation of expiration date:
When the reverse repo maturity, the investor's principal and interest will automatically return to the investor's account. The time of liquidation is usually on the next trading day after the maturity date of the reverse repo. For example, if an investor buys a one-day Treasury reverse repo on Thursday, the funds will mature on Friday and liquidate into the investor's account on the next trading day, usually Monday.
After understanding the basic trading rules and calculation methods of treasury reverse repo, let's return to the original question: how to calculate the purchase of treasury reverse repo on Thursday? Treasury reverse repo is based on the actual number of days to calculate the return, so if an investor buys a one-day reverse repo on Thursday, he will actually calculate three days of interest. The repurchase funds will generally arrive on Friday, but cannot be withdrawn, and it will take until the next Monday to clear and withdraw into the investor's account.
6. Interest is also calculated on Sundays.
In short, treasury reverse repo is a relatively safe short-term investment tool, and by understanding the trading rules and calculation methods, investors can better grasp investment opportunities and achieve stable returns.