Treasury Bonds
A Treasury Bond, often shortened to T-Bond, is a loan you make to the US government for a long period of time, in exchange for regular interest payments and your money back at the end.
When the government wants to borrow money, the Treasury Department auctions off these bonds to investors. You hand over cash upfront, and in return you get a fixed interest rate (called the coupon) paid to you twice a year, plus the full face value of the bond back when it matures, meaning when the borrowing period ends. Treasury Bonds specifically refer to the longest-dated version of this borrowing, with maturities in the range of two to three decades, as opposed to shorter Treasury Notes or Treasury Bills.
The nuance that trips people up is the difference between the bond's price and its yield, which move in opposite directions. If interest rates in the broader economy rise after you buy a bond, newly issued bonds start paying more, so your older, lower-paying bond becomes less attractive and its market price falls, even though the coupon payment itself never changes. Traders who talk about "the bond market moving" are almost always talking about price and yield swinging, not about the government changing the coupon.
Another point of confusion: the face value or denomination you often see quoted is a round number like $1,000, but that is the amount paid at maturity, not necessarily what you'd pay to buy the bond today, since it trades at a price that fluctuates with market conditions.
This term depends on a rule or threshold that changes over time, so no specific figure is quoted here. The maturity range for Treasury Bonds (commonly cited as 20 to 30 years) and the $1,000 denomination should be confirmed against current TreasuryDirect.gov or US Treasury documentation, as auction terms, minimum denominations, and offered maturities can be adjusted over time.
Day traders watch Treasury Bond prices and yields as a barometer of interest-rate expectations, which drives moves in currencies, stocks, and futures contracts tied to bonds like ZB.
Suppose you buy a 30-year Treasury Bond with a $1,000 face value and a 4% annual coupon, paid as $20 every six months. If, a year later, new bonds are being issued at 5% because rates rose, your 4% bond looks less appealing, so its market price might drop to something like $920, even though you'd still collect your $1,000 at maturity if you held on.
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