What is a Treasury Bond?
Treasury bonds, or T-Bonds are the most well known type of bond. They are issued by the United States government and therefore considered without risk. Treasury bonds are issued in $1,000 increments and pay semi-annual coupon payments. Due to the riskless nature of these securities, investors turn to treasury securities when there is instability in the credit and equity markets. This is called a “flight to quality”. One key advantage of treasury securities is the embedded call protection that exists in them. As we discussed in our callable bonds discussion, call protection for the bond holder is paramount, especially when interest rates are trending lower. Treasury bonds are not callable. Where can I buy Treasury securities? Treasury bonds are issued through U.S. Treasury; however, the primary means of debt issuance is through auction by the federal reserve bank. The treasury auction offers three different security types which are differentiated by their term to maturity. Treasury Bill
