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US Treasury securities
Since 1790· Asset or instrument
Fact, law or dataA rule, statute, definition or measured number.
Treasuries are debt securities the US government sells to borrow money, from 4-week bills to 30-year bonds; they are the world's benchmark safe asset.
See it on the Money & Finance map →How it works
The Treasury has borrowed since Alexander Hamilton's 1790 funding plan. Today it sells bills (up to a year), notes (2 to 10 years), bonds (20 and 30 years), inflation-protected TIPS and floating-rate notes at hundreds of auctions a year. More than $28 trillion of marketable Treasuries are outstanding, trading roughly $1 trillion a day. Owners include the Fed, foreign governments and investors (about 30%), money market funds, banks, pensions and individuals. Interest is exempt from state and local income tax.
Why it matters
Their yields are the 'risk-free' base rate that mortgages, corporate loans, cap rates and stock valuations are priced from, and they are the main collateral and reserve asset worldwide.
Facts, rules and data
Treasury's daily yield curve, auction results and Monthly Statement of the Public Debt; foreign holdings from Treasury's TIC data. Individuals can buy at TreasuryDirect or a broker, or hold Treasury ETFs or money market funds.
Debates and risks
Officially the US has never defaulted, though some count a 1979 back-office delay on maturing bills. How much debt markets will absorb at low rates is debated.
Inside this (6)
Connections (18)
▸Open market operations buy and sell US Treasury securitiesFact, law or data
The connection
The New York Fed's trading desk carries out policy mostly by trading Treasuries with big dealer banks. When it buys, it pays by crediting bank reserves, adding money and pushing yields down; when it sells, or lets holdings mature, it drains reserves. Since December 2025 it has been buying T-bills again to keep reserves ample.
When and why
The New York Fed's open market desk, trading with about two dozen 'primary dealers'; holdings sit in the System Open Market Account (SOMA).
How we know
The New York Fed publishes the results of every operation, and the weekly H.4.1 report shows the Fed's Treasury holdings.
Debates and risks
How much the Fed's huge Treasury holdings hold down long-term yields, and whether they blur the line between monetary policy and financing deficits, is debated.
▸US Treasury securities are the benchmark for Bonds: lending money in exchange for interestFact, law or data
The connection
Treasuries are treated as default-free and trade in the deepest market, so their yields are the baseline. Other bonds are quoted as a 'spread' over the Treasury of similar maturity: a company might pay the 10-year yield plus 1.2 points. When Treasury yields rise, borrowing costs for everyone else tend to rise too.
When and why
In bond markets worldwide; the Treasury market trades roughly $1 trillion a day. Commercial real estate loans are commonly quoted the same way.
How we know
New bond deals, index data and dealer quotes are routinely stated as spreads to Treasuries, as in FINRA's TRACE and ICE BofA index data.
Debates and risks
Whether Treasuries remain the safest asset as debt grows; in April 2025 they sold off alongside stocks, unsettling that assumption.
▸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.
▸Treasury notes and bonds (2 to 30 years) are the longer-term US Treasury securitiesFact, law or data
The connection
Notes (2 to 10 years) and bonds (20 and 30 years) make up about two-thirds of marketable Treasury debt. By borrowing for years at a fixed coupon, the Treasury locks in its interest cost; the mix of short and long debt decides how quickly rising rates feed into the federal budget.
When and why
Sold at regular auctions: 2-, 3-, 5- and 7-year notes monthly; new 10-, 20- and 30-year issues quarterly, reopened in the months between.
How we know
Treasury's Monthly Statement of the Public Debt breaks down outstanding debt by type; auction results list every issue.
Debates and risks
Whether investors will absorb ever more long-term debt without demanding a bigger 'term premium', the extra yield for locking money up for years.
▸TIPS: inflation-protected Treasuries are inflation-indexed US Treasury securitiesFact, law or data
The connection
TIPS are a Treasury type, sold in 5-, 10- and 30-year terms, whose principal is indexed to inflation. They are about 7% of marketable debt. Because they trade next to ordinary Treasuries, the yield gap between the two, the 'breakeven', shows the average inflation investors expect.
When and why
First auctioned in January 1997 under Treasury Secretary Robert Rubin, following Britain's index-linked gilts (1981) and using the design of Canada's Real Return Bonds (1991).
How we know
Treasury auction records; the Fed and FRED publish daily breakeven inflation rates from TIPS and regular Treasury yields.
Debates and risks
TIPS trade less actively than regular Treasuries, which may distort breakevens; whether they save or cost the Treasury money is debated.
▸Credit rating agencies: Moody's, S&P and Fitch downgraded (2011, 2023, 2025) US Treasury securitiesFact, law or data
The connection
S&P cut the US from AAA to AA+ in August 2011 after a debt-ceiling standoff. Fitch followed in August 2023, citing governance and rising debt, and Moody's, the last holdout, cut its Aaa to Aa1 in May 2025, citing deficits and interest costs. Treasury yields fell after the 2011 cut as investors still sought safety.
When and why
S&P on August 5, 2011; Fitch on August 1, 2023; Moody's on May 16, 2025.
How we know
The agencies' published announcements and reasoning, plus market data showing little lasting effect on Treasury yields.
Debates and risks
Whether ratings mean much for a country that borrows in its own currency, and whether further cuts could someday force some holders to sell.
▸US Treasury securities are how the US finances The national debt and federal deficitsFact, law or data
The connection
The Treasury covers each deficit, and repays maturing debt, by auctioning new bills, notes and bonds. Marketable Treasuries, about $30 trillion, make up nearly all the debt held by the public; special non-traded securities issued to trust funds like Social Security's make up most of the rest.
When and why
Since Hamilton's 1790 funding plan; today the Treasury holds hundreds of auctions a year, with big banks called primary dealers expected to bid.
How we know
Treasury's Monthly Statement of the Public Debt lists every security outstanding; auction results are published at TreasuryDirect.gov, where individuals can also buy directly.
Debates and risks
How to split borrowing between short bills and long bonds is debated; heavier bill issuance since 2023 may have eased long-term rates but raises refinancing risk.
▸US Treasury securities are the core reserve asset behind The US dollar as the world's reserve currencyFact, law or data
The connection
Central banks need reserves that are safe, pay interest and can be sold in size any day. No other market offers all three at the scale of the nearly $30 trillion Treasury market, so holding dollar reserves largely means holding Treasuries. That steady foreign demand lowers US borrowing costs, by up to about 0.8 percentage point in one estimate.
When and why
Since Bretton Woods, especially since the 1970s. Foreigners hold about $9 trillion; Japan is the largest holder, followed by the UK and China (2025).
How we know
Treasury's monthly TIC data on foreign holdings, IMF reserve data, and Warnock and Warnock (2009), who estimated the yield effect of foreign buying.
Debates and risks
Foreigners' share of Treasuries fell from about half around 2008 to under a third; whether deficits or politics will erode appetite further is debated.
▸US Department of the Treasury issues US Treasury securitiesFact, law or data
The connection
Treasury decides how much of each maturity to issue to fund deficits at the lowest cost, and its Bureau of the Fiscal Service sells bills, notes, bonds, TIPS and floating-rate notes at public auctions. Individuals can buy directly at TreasuryDirect or through a brokerage, or hold them through money market and bond funds.
When and why
Auctions run several times a week, and quarterly 'refunding' announcements set the plan. Borrowing dates to Hamilton's 1790 funding plan.
How we know
Auction results and quarterly refunding statements are published on TreasuryDirect and Treasury's website.
Debates and risks
How much the mix of short versus long debt moves long-term yields, and whether rising debt will push yields higher, is debated.
▸The repo market: overnight loans backed by Treasuries runs mostly on collateral of US Treasury securitiesFact, law or data
The connection
In a repo, a borrower sells Treasuries for cash and agrees to buy them back the next day at a slightly higher price; the difference is interest. Treasuries are the favored collateral because they are safe and easy to value. Dealers and hedge funds finance their Treasury holdings this way, trillions of dollars a day.
When and why
Daily among money funds, dealers, banks and hedge funds, cleared through BNY and the Fixed Income Clearing Corporation; an SEC rule adopted in 2023 phases in central clearing through 2027.
How we know
The New York Fed and the Office of Financial Research publish daily repo volumes and rates.
Debates and risks
Whether hedge funds' heavily borrowed Treasury trades financed in repo could trigger another Treasury market seizure like March 2020.
▸Trade deficits and the current account are funded partly by foreign purchases of US Treasury securitiesMainstream view
The connection
When the US buys more from abroad than it sells, foreigners end up with extra dollars, and many reinvest them in US assets, including Treasuries. By accounting, a current-account deficit must be matched by an equal net inflow of foreign capital. That foreign demand is widely thought to help keep US borrowing costs lower: a mainstream view.
When and why
Foreigners held about $9 trillion of Treasuries in 2025, led by Japan, the UK and China; China has cut its holdings since 2013.
How solid is the link?
The matching is an accounting identity; which assets foreigners buy comes from Treasury's monthly TIC data. How much it lowers yields is estimated.
Debates and risks
Whether deficits drive the inflows or a global 'savings glut' pulls them, and whether tariffs that shrink deficits would cut foreign demand for Treasuries.
▸Yield maintenance: paying the lender's lost interest is calculated off yields on US Treasury securitiesFact, law or data
The connection
The lender's loss is measured against the safest reinvestment: a Treasury maturing near the loan's maturity. The lower that yield, the bigger the gap and the penalty. When Treasury yields rose sharply in 2022–23, many yield-maintenance penalties fell to their 1% floors.
When and why
In loan documents nationwide; most use a Treasury yield from the Fed's H.15 release a few days before payoff.
How we know
Yield-maintenance clauses in loan agreements and the Fed's published H.15 yields.
Debates and risks
Loans differ on which Treasury, whether to interpolate between yields, and what spread to add, which can shift the bill by tens of thousands of dollars.
▸Defeasance: swapping the building's collateral for Treasuries replaces the building's collateral with US Treasury securitiesFact, law or data
The connection
The borrower buys a set of Treasury notes and strips whose payments match each remaining loan payment, and the lien moves from the building to the bonds. When Treasury yields are high the bonds are cheap, so defeasance can cost less than the loan balance; when yields are low, it costs more.
When and why
Mainly in CMBS loans; the Treasuries are bought in the open market through the defeasance consultant's broker.
How we know
Defeasance closing statements and consultants' cost calculators, which price the portfolio at current Treasury yields.
Debates and risks
Some loans allow cheaper agency bonds instead of Treasuries; which securities are allowed can shift the cost noticeably.
▸The petrodollar: oil priced in dollars since the 1974 US–Saudi deal steered Saudi oil money into US Treasury securitiesFact, law or data
The connection
In 1974, Treasury Secretary William Simon agreed with Saudi Arabia that the kingdom could buy Treasuries through special 'add-on' arrangements outside normal auctions, with its holdings kept confidential. Saudi oil surpluses, earned in dollars, flowed into US government debt rather than gold or other currencies, helping fund US deficits after the oil shock.
When and why
Negotiated in July 1974; Saudi holdings were hidden inside an 'oil exporters' group in Treasury data until 2016.
How we know
Declassified cables obtained by Bloomberg in 2016, after which Treasury first disclosed Saudi holdings, about $117 billion.
Debates and risks
How large Saudi holdings really are today is unclear, since some may sit with custodians in London or elsewhere outside the reported figure.
▸Global money flows: how capital moves between countries pour heavily into US Treasury securitiesFact, law or data
The connection
Treasuries are the deepest, most liquid safe asset, roughly $30 trillion of tradable debt, so foreign central banks park reserves there and private investors flee to them in scares. Foreigners held about $9.3 trillion in June 2026. There are exceptions: in March 2020 and April 2025, Treasuries were sold alongside riskier assets.
When and why
Through primary dealers and custodians, mainly in New York, London, Tokyo, Brussels and Luxembourg.
How we know
Treasury TIC data on foreign holdings and purchases, plus auction results showing the share won by 'indirect' bidders, mostly foreign.
Debates and risks
After April 2025, when yields rose and the dollar fell together, analysts debated whether Treasuries' safe-haven status is eroding.
▸Foreign holders of US Treasuries (TIC data): Japan, UK, China own roughly 30% of US Treasury securitiesFact, law or data
The connection
Foreigners held about $9.3 trillion of roughly $30 trillion of marketable Treasuries in June 2026. Their share was about half in 2008 and has fallen because US debt grew faster than foreign demand, while the Fed, money funds, banks and households bought more.
When and why
Japan, the UK and China lead; custody centers such as Belgium, Luxembourg and the Cayman Islands follow.
How we know
Treasury's monthly TIC data and its Monthly Statement of the Public Debt.
Debates and risks
Whether foreign demand keeps pace with heavy US borrowing, and at what yield, is a key question for future interest rates.
▸Clearing houses: DTCC, the Options Clearing Corp. and CME Clearing will soon centrally clear most trades of US Treasury securitiesFact, law or data
The connection
Many Treasury trades, especially by hedge funds and on electronic platforms, still settle between the two parties, leaving each exposed if the other fails. An SEC rule of December 2023 requires clearing of most dealer cash trades by December 31, 2026 and repo trades by June 30, 2027, mainly through DTCC's FICC, with CME and ICE also approved.
When and why
Washington and New York; the rule followed the March 2020 'dash for cash' and the October 2014 'flash rally'.
How we know
The SEC final rule and its February 2025 one-year extension, plus Treasury and Fed reports on market resilience.
Debates and risks
Whether clearing makes the roughly $30 trillion market safer or concentrates risk in a few clearing houses and raises trading costs.
▸World bond markets: about $160 trillion of debt (2025) are anchored by US Treasury securitiesFact, law or data
The connection
The 10-year Treasury yield is the global benchmark: other bonds are priced as spreads over it, or over local government bonds that tend to move with it. At roughly $30 trillion, Treasuries are close to a fifth of the world's bonds. When Treasury yields jump, yields worldwide often follow.
When and why
Centered in New York, trading roughly $1 trillion a day; the benchmark role grew after World War II.
How we know
IMF and Fed research on spillovers from US yields to other bond markets.
Debates and risks
Whether rising US debt and a higher term premium weaken that anchor role over time is debated.