U.S. Treasury Securities
Last reviewed: September 30, 2026
U.S. Treasury securities are debt obligations of the United States government. They include Treasury bills, notes, bonds, and related instruments such as TIPS. Investors use them for ballast, cash management, and as a benchmark for other yields because credit risk is considered among the lowest in global markets.
Reviewed September 2026
Main types of Treasuries
Treasury bills (T-bills) mature in one year or less and are typically sold at a discount. Treasury notes mature in two to ten years and pay semiannual coupons. Treasury bonds have longer maturities, historically up to 30 years, also with semiannual coupons. TIPS adjust principal with inflation; floating-rate notes pay a variable coupon tied to short-term rates.
You can buy individual securities at auction or on the secondary market, or gain exposure through mutual funds and ETFs that hold Treasuries.
Why investors hold them
Treasuries are used for capital preservation relative to corporate credit, for duration ballast alongside stocks, and for matching known future liabilities. Short Treasuries often serve as a cash-plus alternative. Longer Treasuries can rise in price when yields fall, which sometimes (not always) helps in equity selloffs—but interest-rate risk is real when yields rise.
Simple example
You allocate 40% of a portfolio to a short-term Treasury fund to stabilize volatility next to stock index funds. When equities drop, the Treasury sleeve may cushion the overall portfolio depending on what happens to yields. Separately, you might ladder T-bills maturing every few months to cover near-term expenses without selling stocks.
Risks that still exist
Interest-rate risk: bond prices fall when yields rise, more so for longer maturities. Inflation risk: fixed coupons lose purchasing power if inflation runs hot (TIPS address this differently). Reinvestment risk: maturing bills may roll into lower yields. Opportunity risk: heavy Treasury allocations can lag diversified stock returns over long periods.
While U.S. Treasuries are treated as high-quality credit instruments, no investment is free of all risk. Currency risk matters for non-U.S. investors.
Treasuries vs. other bonds
Corporate and municipal bonds offer different yield and tax profiles with additional credit (and sometimes call) risk. Mortgage-backed securities add prepayment dynamics. Understanding Treasuries helps you interpret the “risk-free” benchmark curve used across markets.
Where to learn more on this site
See our bonds overview for broader fixed-income context, and asset allocation for how bonds fit beside stocks. Futures traders also encounter Treasury futures; that is a leveraged overlay, not the same as owning cash Treasuries.
How to buy and hold Treasuries
Individuals can buy at auction via TreasuryDirect or through a brokerage. Funds and ETFs offer instant diversification across maturities and simple reinvestment of income, at the cost of a small expense ratio and possible premium/discount dynamics for ETFs.
Choose maturity based on purpose. Money you need within a year often fits T-bills or short funds. Ballast for a multi-year portfolio might use intermediate Treasuries. Long bonds amplify rate moves—useful for some hedges, uncomfortable for many households.
Taxes and account location (high level)
Treasury interest is generally exempt from state and local income taxes in the U.S., while still subject to federal tax—details depend on current law and your situation. That feature can matter in high-tax states when comparing after-tax yields with fully taxable corporate bonds.
Account location still matters: tax-advantaged accounts change the analysis. This is not tax advice; confirm with a qualified professional for large decisions.
Globally diversified investors outside the U.S. should weigh currency risk when holding USD Treasuries as “safe” assets. Safety in local purchasing power is not identical to safety in dollar terms.
Yield curve basics for ordinary investors
Treasury yields across maturities form a curve that markets watch closely. An upward-sloping curve often means longer bonds yield more than shorter bills. Inversions—short yields above long yields—attract headlines; they are information, not automatic trading signals for households.
For personal finance, the curve mainly helps you choose maturities that match when you need money. Laddering bills and notes can reduce reinvestment surprise compared with keeping everything overnight in cash—or locking everything into a single long bond.
Funds that target a duration give you a packaged slice of the curve. Read whether a fund is short, intermediate, or long before buying it as “the bond half” of a portfolio.
Treasuries inside a simple portfolio
A common pattern pairs global or U.S. stock index funds with a Treasury or high-quality bond fund. The stock sleeve drives long-term growth; the Treasury sleeve dampens swings and provides dry powder for rebalancing after equity declines.
You do not need dozens of Treasury products. One or two funds covering the duration you want is enough for most households. Rebalance occasionally, reinvest income unless you need cash flow, and ignore day-to-day yield headlines unless your timeline changed.
If you hold individual bonds to maturity, you lock in a known nominal payoff schedule (assuming no credit event—which for Treasuries is treated as minimal). Funds do not “mature” the same way; they maintain a duration target. Choose consciously between those experiences.