Treasury securities are marketable U.S. government obligations issued as bills, notes, bonds, TIPS, and floating-rate notes.
Treasury securities are debt obligations issued by the U.S. Department of the Treasury to finance federal operations and refinance maturing public debt. Treasury currently issues five types of marketable securities: bills, notes, bonds, Treasury Inflation-Protected Securities (TIPS), and floating-rate notes (FRNs).
“Marketable” means an owner can transfer the security or sell it before maturity. It does not mean the price is fixed or that an investor can always recover the purchase amount in an early sale.
| Type | Current Treasury term | Cash-flow structure | Main exposure to evaluate |
|---|---|---|---|
| Treasury bill | 4, 6, 8, 13, 17, 26, or 52 weeks | Discount or par purchase; face value at maturity | Reinvestment and short-horizon rate risk |
| Treasury note | 2, 3, 5, 7, or 10 years | Fixed interest every six months | Intermediate interest-rate and inflation risk |
| Treasury bond | 20 or 30 years | Fixed interest every six months | Long duration and purchasing-power risk |
| TIPS | 5, 10, or 30 years | Fixed rate applied to CPI-adjusted principal | Real-yield, liquidity, index, and tax risk |
| Floating-rate note | 2 years | Quarterly interest based on a 13-week bill index plus a fixed spread | Reset-rate, spread, and reinvestment risk |
Terms and auction schedules can change. A historical table should not replace the current auction announcement or TreasuryDirect product page.
Treasury first sells marketable securities through auctions. Noncompetitive bidders agree to accept the auction result. Competitive bidders specify a rate, yield, or discount margin and may receive all, part, or none of the requested amount.
After issuance, securities trade in the secondary market through banks, brokers, and dealers. The newest benchmark issues are generally called on-the-run, while older issues are off-the-run Treasuries. Their prices can differ because of maturity, coupon, duration, liquidity, financing demand, and available supply.
TreasuryDirect permits noncompetitive auction purchases but does not directly execute secondary-market sales. A security held there must generally be transferred to a bank, broker, or dealer before it can be sold, subject to applicable transfer rules.
For notes and bonds, the coupon rate determines interest paid on face value. Market yield reflects price and all remaining scheduled cash flows. If required yield rises above the coupon rate, price generally falls below par; if required yield falls below the coupon, price generally rises above par.
Bills use discount and investment-rate conventions rather than a semiannual coupon. FRNs reset their interest rate, reducing but not eliminating price sensitivity. TIPS are quoted in real-yield terms and apply a fixed coupon rate to inflation-adjusted principal.
Before comparing returns, align:
Assume a business has three known obligations: $100,000 in 13 weeks, $150,000 in 26 weeks, and $250,000 in one year. It could analyze bills maturing near each payment date rather than place the full $500,000 in a longer note and plan to sell portions early.
The bill approach can reduce dependence on unknown resale prices because each maturity is aligned with a liability. It does not eliminate risk: auction timing may not match the exact dates, rates can decline when cash is reinvested, and operational errors can disrupt settlement. The example illustrates cash-flow matching, not a recommendation to use a particular ladder or account.
| Question | Useful starting measure | Important caveat |
|---|---|---|
| What cash will be paid? | Contractual coupon and principal schedule | Does not show present market value |
| What is the quoted return if held under assumptions? | Yield to maturity or investment rate | Reinvestment and sale assumptions may not hold |
| How sensitive is price to rates? | Duration and convexity | Yield-curve shifts may not be parallel |
| What inflation is priced into markets? | Nominal yield minus comparable TIPS real yield | Includes inflation and liquidity risk premiums |
| How did an auction clear? | High yield or rate, price, awards, and bid-to-cover | One statistic cannot grade the auction |
| What can be realized today? | Executable bid and total settlement proceeds | Indicative quotes may not be executable |
This article is educational and does not recommend a Treasury security, maturity, bid type, account, or trading strategy.