Treasury Bonds

Financial Times  Nov 23  Comment 
Trading of older government paper becomes challenging amid dealers’ balance sheet constraints
Financial Times  Oct 22  Comment 
Auction of two-year notes postponed amid Congress political stand-off
Financial Times  Oct 22  Comment 
New buyers are more price sensitive so demand could be more volatile
Forbes  Oct 9  Comment 
Successful investing, particularly in macro, boils down to finding attractive risk/reward bets. Typically, when you’re betting on events or scenarios that have never happened before, the risk/reward profiles are attractive because the market...  Sep 14  Comment 
WASHINGTON - Interest rates on short-term Treasury bills fell in Monday's auction to their lowest levels in three weeks.
Financial Times  Aug 24  Comment 
Yields fall back below 2 per cent for the first time since April


Treasury bills, notes, and bonds are examples of default-free securities. Treasury bonds (T-Bonds, or the long bond) have the longest maturity, from ten years to thirty years. They have coupon payment every six months like T-Notes, and are commonly issued with maturity of thirty years.

Treasury notes and bonds operate differently from a Treasury Bill. A note denotes a security with a date of maturity larger than one year up to ten years. A bond is a security that exceeds ten years in maturity. Notes are offered in lengths of two, three, five, and ten years. Bonds are only offered in a length to maturity of thirty years.

Treasury notes and bonds pay coupon payments every six months including the final date of maturity. For example, if you purchased a $100,000 two-year Treasury note on January 15 2008 at an annual rate of 5%, then your income stream would look like this:

Date Income ($)
7/15/08 2,500
1/15/09 2,500
7/15/09 2,500
1/15/10 102,500

A stock chart for the 30 YR T-Bond

Inflation-Protected Treasury Notes and Bonds

The U.S. government also offers inflation-indexed notes and bonds, also known as TIPS (Treasury Inflation-Protected Securities). They are offered in lengths of five, ten, and twenty years to maturity. While the interest-rate payments stay the same, they are applied to the principal, which is adjusted for inflation every six months.

For more information, see also

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