Treasury bonds

RECENT NEWS
Financial Times  Jun 4  Comment 
Peak in bond yields coincides mostly with that in the Federal Funds rate
Insurance Journal  May 30  Comment 
U.S. Treasuries need to get a lot cheaper to attract some European investors. Even with yields at multi-year highs, Treasuries are paying less than their pricier German peers when European insurers account for steep hedging costs. A stronger...
The Economist  May 24  Comment 
JOHN KENNETH GALBRAITH, a quotable economist, observed that one of the deeper mysteries is why, in a falling market, there is still a buyer for every seller. It is a conundrum that bond investors must now contemplate. Since January the yield on a...
Channel News Asia  Apr 24  Comment 
Jeffrey Gundlach, chief executive officer of DoubleLine Capital, said on Tuesday that U.S. Treasuries are "not attractive" even though the benchmark 10-year Treasury yield crossed the critical 3 percent threshold earlier in the day.
Financial Times  Apr 17  Comment 
Boost eases fears Beijing will dump US government debt in retaliation for tariffs
Motley Fool  Apr 13  Comment 
Treasury bonds may not have the same risks as stocks, but that doesn't make them risk-free.




 
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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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