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Treasury Bond: The Government Debt Behind the Yield Curve

By Imperialpedia Staff

A Treasury bond is a long-term debt security issued by the U.S. government, typically with a maturity of 20 or 30 years, paying a fixed interest rate every six months until maturity, at which point the original face value is repaid.

Why They're Considered So Safe

Treasury bonds are backed by the full faith and credit of the U.S. government, making default risk essentially the lowest available among widely traded securities. This safety is why Treasury yields serve as a benchmark reference point for pricing risk across nearly every other type of bond and loan in the economy.

Treasury Bonds vs. Notes vs. Bills

The U.S. government issues debt across different maturity ranges under different names: Treasury bills mature in a year or less, Treasury notes mature in 2 to 10 years, and Treasury bonds mature in 20 or 30 years. All three share the same government backing, differing mainly in maturity length and how that affects yield and price sensitivity to interest-rate changes.
IMPORTANT
Even "safe" Treasury bond prices can decline before maturity if interest rates rise, since the price of an existing bond falls to make its fixed coupon competitive with newly issued, higher-rate bonds. Safety from default risk isn't the same as safety from price fluctuation.

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