What are Treasury notes, bonds, and TIPS?
Treasury notes and bonds are securities that pay a fixed rate of interest every six months until your security matures, which is when we pay you their par value. The only difference between them is their length until maturity. Treasury notes mature in more than a year, but not more than 10 years from their issue date. Bonds, on the other hand, mature in more than 10 years from their issue date. Treasury also sells Treasury Inflation-Protected Securities (TIPS). They pay interest twice a year and the principal value of TIPS is adjusted to reflect inflation as measured by the Consumer Price Index – the Bureau of Labor Statistics’ Consumer Price Index for All Urban Consumers (CPI-U). With TIPS, we calculate your semi-annual interest payments and maturity payment based on the inflation-adjusted principal value of your security.
