Treasury Bonds

RECENT NEWS
247WallSt  Sep 11  Comment 
The U.S. Treasury has conducted a 30-year Treasury bond auction and the results looked impressive.
Financial Times  Aug 18  Comment 
It is premature to sell now, but as 10-year Treasury yields approach 2% it should provide an opportunity to rebalance portfolios
Reuters  Aug 18  Comment 
Don't bet against the U.S. bond market rally anytime soon.
Reuters  Aug 17  Comment 
Don't bet against the U.S. bond market rally anytime soon.
SeekingAlpha  Aug 13  Comment 
My friend, Texan money manager Mike Robertson, asked me the other day if there was one asset class that I truly despised. I didn't hesitate: bonds. In fact, fixed income investments are about to regain the nickname they earned during the 1980s:...
Financial Times  Jul 25  Comment 
The strong demand for ultra-long duration bonds issued by Canada and Mexico could result in similar offerings from the US
Wall Street Journal  Jul 18  Comment 
Treasury bonds pulled back after the biggest rally in two months. The U.S. government debt market still logged a weekly price gain.




 
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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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