Facts about Treasury Products and Treasury Yield



Treasury yield is the interest made on investing on United States government securities such as Treasury bills, Treasury notes, and Treasury bonds. A more simple definition of treasury yield is that it is the amount of money you will receive after buying Treasury bonds and bills. A treasury yield is the discount you earn if you invest in treasury bills while it is the coupon that will be paid to you if you hold treasury bonds or notes. Both the coupon and discount are determined as a percentage of the value of these government securities on a yearly basis.



Treasury bonds, notes and bills are often referred to simply as Treasuries or Treasury products. They are issued and auctioned by the United States Department of the Treasury to pay for public debts. The Department of the Treasury establishes a fixed interest rate and face value for these treasuries.

Treasury bills are also called T-Bills. They are the type of government securities that mature in less than one year. They could mature in 28, 91, 182 or 364 days. Cash management bills are treasury bills that mature in less than 91 days. For investors, it is considered the least risky of all government securities. They are sold every week via single price auctions. Meanwhile, Treasury bonds are also called T-Bonds. T-Bonds are government securities that will mature after one year. Treasury bonds may mature twenty years or even after 30 years. Meanwhile, Treasury notes will mature in two to year years. T-notes pay coupon for every six months.

If there is high demand for a particular bond, note or bill, the security will be sold to the highest bidder with its price above the established face value. Because the United States government will only pay face value and interest rate on the amount it has set, the yield will decrease. On the other hand, if there is less demand for the bill or bond, bidders will only pay less than the established face value. This will increase the yield of that particular treasury product. Higher yields means that the Department of the Treasury will need to pay higher interest rates in order to attract more investors. Giving high interest rates can help increase the demands for such Treasuries. That is why higher Treasury yields can increase the value of the U.S. dollar.