Treasury bonds

RECENT NEWS  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
Financial Times  Aug 5  Comment 
Mixed data cloud US rate expectations
Financial Times  Jul 29  Comment 
Bond funds face spike in redemptions as rates increase
Financial Times  Jul 13  Comment 
Rise of electronic trading among multiple causes, say regulators
Wall Street Journal  Jun 18  Comment 
Longer-dated U.S. Treasury bonds pulled back and shorter-dated notes strengthened due to concerns that the Federal Reserve’s go-slow approach in raising interest rates could generate inflation.


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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