Treasury Securities

Definition of 'Treasury Securities'
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Treasury securities are bonds issued by the U.S. government. There are various types of Treasury securities. The shortest-maturity issues are called Treasury bills. Bonds that mature in two to 10 years (from the time they are issued) are called Treasury notes. The 30-year Treasury is called the Treasury bond, or "the long bond," or even just "the bond." Nonmarketable savings bonds are another species of Treasury security.

Yields on Treasury securities are lower than interest rates on all other types of bonds. That is because they entail no credit risk -- the U.S. government, with its awesome taxing power, is a safe bet to repay. As such, Treasury yields are benchmarks for all other interest rates.

The 10-year note is the U.S. benchmark, meaning that people look to its yield as a proxy for all U.S. interest rates. Formerly, that honor went to the 30-year bond. But reduced issuance of 30-year bonds has given them scarcity value, making them less reliable as an indicator of how high people think interest rates should be.