Hedge Fund
Treasury Bills are loans to the federal government that mature at terms ranging from a few days to 52 weeks.A Treasury Bill (T-Bill) is a short-term U.S. government debt obligation backed by the Treasury Department with a maturity of one year or less. Treasury bills are usually sold in denominations of $1,000. However, some can reach a maximum denomination of $5 million in non-competitive bids. These securities are widely regarded as low-risk and secure investments.
The Treasury Department sells T-Bills during auctions using a competitive and non-competitive bidding process. Noncompetitive bids—also known as non-competitive tenders—have a price based on the average of all the competitive bids received. T-Bills tend to have a high tangible net worth. The longer the maturity date, the higher the interest rate that the T-Bill will pay to the investor.
Treasury Note matures in 2 to 10 years. A Treasury note (T-note for short) is a marketable U.S. government debt security with a fixed interest rate and a maturity between two and 10 years. Treasury notes are available from the government with either a competitive or noncompetitive bid. With a competitive bid, investors specify the yield they want, at the risk that their bid may not be approved; with a noncompetitive bid, investors accept whatever yield is determined at auction.A Treasury note is just like a Treasury bond, except that they have differing maturities—T-bond lifespans are 20 to 30 years.
Treasury Bond matures in 20 or 30 years. Treasury bonds (T-bonds) are government debt securities issued by the U.S. Federal government that have maturities greater than 20 years. T-bonds earn periodic interest until maturity, at which point the owner is also paid a par amount equal to the principal. T-bonds pay semiannual interest payments until maturity, at which point the face value of the bond is paid to the owner. Treasury bonds are part of the larger category of U.S. sovereign debt known collectively as treasuries, which are typically regarded as virtually risk-free since they are backed by the U.S. government's ability to tax its citizens.
Along with Treasury bills, Treasury notes, and Treasury Inflation-Protected Securities (TIPS), Treasury bonds are one of four virtually risk-free government-issued securities.
Bond prices and yields move in opposite directions—falling prices boost yields, while rising prices lower yields.
The 10-year yield is used as a proxy for mortgage rates. It's also seen as a sign of investor sentiment about the economy.
A rising yield indicates falling demand for Treasury bonds, which means investors prefer higher-risk, higher-reward investments. A falling yield suggests the opposite.
