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Treasury bills (T-bills)
Since 1929· Asset or instrument
Fact, law or dataA rule, statute, definition or measured number.
T-bills are US government IOUs maturing in a year or less, sold at a discount and repaid at full face value.
See it on the Money & Finance map →How it works
Terms run from 4 to 52 weeks. There is no coupon: you might pay $990 for a $1,000 bill and get $1,000 at maturity; the $10 is your interest. First auctioned in December 1929, they are now sold weekly, from $100 minimum. Bills are about a fifth of marketable Treasury debt. Their yields closely track the Fed's policy rate, rising within days of a hike. Interest is federally taxed but free of state and local income tax.
Why it matters
They are the closest thing to a riskless dollar return, the core holding of money market funds and the main reserve asset behind dollar stablecoins.
Facts, rules and data
Treasury auction results and daily yields; the Monthly Statement of the Public Debt. Individuals get exposure by buying at TreasuryDirect or a broker, or through a Treasury money market fund or T-bill ETF.
Inside this (1)
Connections (9)
▸Treasury bills (T-bills) yield nearly in step with The federal funds rateFact, law or data
The connection
A T-bill and an overnight loan of bank reserves are both near-riskless short loans, so their rates cannot drift far apart: if bills paid much less, money funds and banks would park cash at the Fed's facilities instead. Bill yields therefore track the fed funds rate and move ahead of expected Fed moves.
When and why
Daily in US money markets. As the Fed hiked in 2022–23, 3-month bill yields rose from near zero to above 5%.
How we know
Decades of daily data, such as the 3-month bill and effective fed funds series on FRED, show the two moving almost together.
Debates and risks
Bills can break from the Fed's rate during debt-ceiling standoffs, surges in bill supply or flights to safety; how far they can diverge is unsettled.
▸Treasury bills (T-bills) are the shortest-term US Treasury securitiesFact, law or data
The connection
Bills are the short end of Treasury borrowing, maturing in 4 to 52 weeks. They are about a fifth of marketable Treasury debt and are constantly rolled over, letting the Treasury absorb swings in cash needs around tax dates, crises and debt-ceiling standoffs without changing its long-term debt.
When and why
First auctioned in December 1929; now sold weekly. Treasury's borrowing advisory committee has suggested keeping bills near 15–20% of debt.
How we know
Treasury's Monthly Statement of the Public Debt lists bills outstanding; auction results are published for every sale.
Debates and risks
How heavily to lean on bills is argued: they cost less when short rates are low, but must be refinanced often, exposing the budget to rate jumps.
▸TreasuryDirect: buying Treasuries directly sells Treasury bills (T-bills)Fact, law or data
The connection
An individual opens a free account, places a 'non-competitive' bid from $100 up to $10 million, and gets the same yield big institutions set at the weekly auction. Cash is debited on issue day and returned at maturity, or rolled automatically into new bills. Selling early requires transferring the bills to a broker first.
When and why
TreasuryDirect.gov, run by Treasury's Bureau of the Fiscal Service since 2002; bills auctioned weekly.
How we know
Treasury auction results list non-competitive awards, and TreasuryDirect's published rules describe the process and the 45-day hold before transfers.
Debates and risks
Whether Treasury should modernize or retire the site, since most brokerages now place auction bids free and allow easy selling, is an open question.
▸Treasury bills (T-bills) are a core holding of Cash and money market fundsFact, law or data
The connection
Government money funds hold mainly T-bills and repo loans backed by Treasuries, so their yields track the fed funds rate. When the Treasury issues more bills, money funds are the biggest buyers. Individuals can skip the fund and buy bills directly at TreasuryDirect or a brokerage; the interest is free of state income tax.
When and why
T-bills since 1929, money funds since 1971; after the June 2023 debt-ceiling deal, money funds absorbed much of a surge in new bill issuance.
How we know
Money funds' monthly portfolio filings to the SEC (Form N-MFP) and Treasury auction data show the holdings; Rule 2a-7 limits funds to short, high-quality debt.
Debates and risks
How heavily the Treasury can lean on bills without strain, and how a debt-ceiling standoff would hit funds holding bills due near the deadline.
▸Stablecoins: crypto tokens pegged to a currency are backed largely by Treasury bills (T-bills)Fact, law or data
The connection
A dollar stablecoin issuer takes in dollars and promises to redeem each coin for $1. It invests the reserves mostly in short T-bills and Treasury repos and keeps the interest. The GENIUS Act requires 1:1 reserves in cash, insured deposits, bills maturing within 93 days, Treasury repos or government money funds.
When and why
Tether (2014) and Circle's USDC (2018); the GENIUS Act was signed July 18, 2025. Tether alone held more than $100 billion in T-bills in 2025.
How we know
Issuers' published reserve reports and attestations list T-bill holdings; the GENIUS Act text sets the reserve rules.
Debates and risks
Whether stablecoin growth pulls deposits from banks, and whether a run on a big issuer could force a fire sale of T-bills.
▸GENIUS Act reserve rules: 1:1 in cash and short T-bills require backing in cash and Treasury bills (T-bills)Fact, law or data
The connection
The reserve list centers on cash, bank deposits and Treasury securities maturing within 93 days, in effect T-bills, plus repos backed by them and government money funds holding them. Bills are the easiest dollar asset to sell quickly at a known price, and they pay close to the Fed's policy rate.
When and why
Set by the GENIUS Act in July 2025; Tether and Circle already held mostly bills before then.
How we know
Reserve reports show Tether with about $115 billion in T-bills in June 2026; Circle's reserve fund holds bills and Treasury repo.
Debates and risks
Whether regulators will later widen the list to longer Treasuries or other assets if issuers lobby for more yield.
▸Stablecoins as major buyers of Treasury bills add steady demand for Treasury bills (T-bills)Mainstream view
The connection
Stablecoin issuers buy bills and roll them every few weeks, adding a large, steady buyer at the shortest end of the Treasury market. More demand pushes bill prices up and yields down slightly. Outflows do the reverse, and research finds outflows move yields more than inflows.
When and why
Visible since about 2021 and growing with stablecoin supply, now about $300 billion.
How solid is the link?
A 2025 BIS working paper measured effects of a few basis points; Treasury's borrowing advisory committee discussed stablecoin demand in 2025.
Debates and risks
How large the effect becomes if supply reaches the $2 trillion some forecast.
▸Tether (USDT): the largest dollar stablecoin holds over $100 billion of Treasury bills (T-bills)Fact, law or data
The connection
Tether invests most of the dollars it receives for USDT in short-term US government debt. On June 30, 2026 its reserves held about $115 billion in T-bills plus about $26 billion in Treasury reverse repos, against about $184 billion of tokens. The interest, close to the Fed's rate, is Tether's main profit.
When and why
Tether shifted from commercial paper to T-bills in 2022; holdings are reported in quarterly attestations.
How we know
Quarterly attestations by BDO, which are point-in-time checks, not full audits.
Debates and risks
How quickly Tether could sell its bills in a run, and how much its gold and bitcoin holdings add to risk.
▸The Fed's overnight reverse repo facility (ON RRP) drained as money funds switched into Treasury bills (T-bills)Fact, law or data
The connection
After the June 2023 debt-ceiling deal, Treasury sold over $1 trillion of new T-bills at yields slightly above the RRP rate. Money funds moved cash out of the Fed and into bills. The facility drained from over $2 trillion in mid-2023 to near zero by late 2025, letting QT proceed without draining bank reserves.
When and why
June 2023 through late 2025, sped up by heavy bill sales after the July 2025 debt-limit increase.
How we know
New York Fed RRP totals, Treasury auction data, and ICI and SEC data on money fund holdings.
Debates and risks
Whether the facility could refill if bill supply shrinks or the Fed buys more bills is uncertain.