Treasury Bond (T-Bond)
Quick Definition
A long-term U.S. government debt security with a maturity of 20 or 30 years, paying semiannual coupon interest.
Key Takeaways
- Maturities of 20 or 30 years — the longest Treasury securities
- Semiannual fixed coupon payments backed by U.S. government
- High duration means significant price sensitivity to rate changes
- Benchmark for long-term rates, mortgages, and economic outlook
What Is Treasury Bond (T-Bond)?
Treasury bonds (T-bonds) are long-term debt securities issued by the U.S. Department of the Treasury with maturities of 20 or 30 years. They pay fixed coupon interest semiannually and return the face value at maturity. T-bonds are backed by the full faith and credit of the U.S. government, making them among the world's safest investments. However, their long duration makes them highly sensitive to interest rate changes — a 30-year T-bond might lose 15–20% of its value if rates rise by 1 percentage point. T-bonds serve as the benchmark for long-term interest rates, influencing mortgage rates, corporate borrowing costs, and pension fund valuations. The 30-year Treasury yield is closely watched as an indicator of long-term inflation expectations and economic outlook.
Treasury Bond (T-Bond) Example
- 1The 30-year Treasury bond yielding 4.5% serves as the benchmark for pricing 30-year fixed-rate mortgages
- 2In 2022, 30-year T-bonds lost over 30% of their value as the Fed raised rates from near zero to over 4%
Related Terms
Treasury Note (T-Note)
A medium-term U.S. government debt security with a maturity of 2 to 10 years, paying semiannual coupon interest.
Treasury Bill (T-Bill)
A short-term U.S. government debt security with a maturity of one year or less, sold at a discount and redeemed at face value.
Duration
A measure of a bond's price sensitivity to interest rate changes, expressed in years, indicating how much the price will move for a 1% change in rates.
Sovereign Bond
A debt security issued by a national government, considered the benchmark for credit risk and interest rates in that country.
Bond
A fixed-income debt security where investors loan money to an issuer in exchange for regular interest payments and return of principal at maturity.
Yield Curve
A graphical representation of interest rates across different maturities for bonds of similar credit quality, typically U.S. Treasuries.
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