What are Treasuries?

Treasuries are debt securities issued by the U.S. Department of the Treasury to fund government spending and manage the national debt. They are considered one of the safest investments because they are backed by the “full faith and credit” of the U.S. government. Treasuries are widely used by both individual and institutional investors as a low-risk component in their portfolios.

There are several types of Treasuries:

Treasury Bills (T-Bills)

Short-term securities with maturities of 4 weeks to 1 year. They are sold at a discount and pay no interest, but the difference between the purchase price and the face value at maturity is the investor’s return.

Treasury Notes (T-Notes)

Medium-term securities with maturities ranging from 2 to 10 years. They pay a fixed interest rate every six months.

Treasury Bonds (T-Bonds)

Long-term securities with maturities of 20 to 30 years, paying a fixed interest rate every six months.

Treasury Inflation-Protected Securities (TIPS)

These securities protect against inflation. The principal value adjusts with inflation, and they pay interest twice a year based on the adjusted principal.

Treasuries play a significant role in financial markets, often serving as a benchmark for other interest rates and as a safe haven during economic uncertainty.

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