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Debt instruments issued by the US government, including bills, notes and bonds.
Save conceptUS Treasury securities are debt instruments issued by the United States Treasury to fund government financing needs. Marketable instruments include bills, notes, bonds, -protected securities and floating-rate notes. Their maturity and payment features differ. Financial reports often call them Treasuries and use their yields as benchmarks for other borrowing costs in US dollars.
Treasury bills generally pay through the difference between their purchase price and face value at maturity rather than periodic coupons. Notes and bonds pay scheduled interest. Other instruments have -linked principal or floating interest features. Investors can buy at issuance or in the secondary market, where prices change with , demand and remaining maturity.
Suppose an investor buys a hypothetical short-term Treasury bill for 9,800 and receives 10,000 at maturity. The 200 difference is the cash gain before costs and taxes. It is a return of about 2.04% on the purchase price over the holding period, not automatically a 2.04% annual yield. Annualising it requires the period and the applicable yield convention.
US government backing does not eliminate every investment risk. Selling a Treasury before maturity can produce a price loss, can reduce purchasing power, and a non-US-dollar investor faces exchange-rate exposure. US Treasuries are also different from Jamaican government securities; , issuer and market conventions must remain explicit when comparing them.
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