You may find these links helpful:

• US Treasury Savings Bonds
• "How to handle $"

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You tell them you want to buy something. They find it and buy it for you. Just like buying anything else through a brokerage.

The vast majority of bonds you’ll find available are on the secondary markets, because that’s where the vast majority of bonds are.

If they offer the option, you may also be able to place bids at an auction through them.

I’ve never specifically used Merrill, so I can’t speak for them specifically how they display those options (as far as whatever yield you believe you are seeing). You may simply be mistaking which bond you are looking at. They may provide an estimated yield based on current market trends, as a guide, with no guarantee that’s what you’ll get. They may be offering to make a competitive bid at that price or better, with no guarantee you’ll win the auction. Or something else. Either read the description, or call and ask.

>I'm a bit confused how my brokerage (Merrill) can offer an interest rate on an upcoming treasury bill when it hasn't been auctioned yet and the interest is not known until auction date?

That's just an estimate of what the return will be. You're correct - you won't know the real return until after the auction.

>And how does a brokerage offer so many treasury bills outside of an upcoming auction (https://www.treasurydirect.gov/auctions/upcoming/)? Is that through the secondary market, as in someone is selling a bill before maturity and someone else is buying that bill?

Probably. I use Fidelity and you can buy new issue T-bills at auction, or existing bills on the secondary market. Their user interface has settings where you can view just new issues, or those being sold on the secondary market.

If you buy new issues, you are indeed participating in an auction. You'll enter your price ceiling (limit order). At the end of the auction, you'll get the number of units you've won, or none at all if you're outbid by everyone else.

Each auction has highs, lows, and averages.. Some people win at a lower price (higher yield). Some people win at a higher price (lower yield).

I am a newbie of t-bill + brokerage. So, different people purchase same t-bills at a different price?

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If yes, any good strategy to have a slight favor?

> So, different people purchase same t-bills at a different price?

Yes.

> If yes, any good strategy to have a slight favor?

Be patient and set your limit, and always be prepared to not get anything at all.

At a T-bill auction most investors enter a non-competitive bid. You are bidding for the amount of T-bills you want and agree to accept the auction price, whatever it turns out to be. Large investors and institutions enter competitive bids, indicating the rate/yield that they will accept. Those competitive bids help determine the outcome of the auction and the rate/yield you receive.

Thanks for the explanation!

Thanks!

Interesting. That's good to know.