The U.S. Department of the Treasury finances federal operations and refinances maturing debt partly by issuing securities. These range from four-week bills to 30-year bonds, with fixed, floating and inflation-linked structures. Most are marketable: after they are issued, investors can buy and sell them before maturity.
The primary market is where Treasury issues new securities through auctions. The secondary market is where previously issued securities trade between investors, typically through dealers and brokers.
The main types of marketable Treasury securities
“Treasury bond” is often used informally for all federal debt, but Treasury uses precise product names. A Treasury savings bond is not the same as a marketable Treasury Bond.
| Security | Original terms | How interest works | Typical payment pattern |
|---|---|---|---|
| Treasury bills (T-bills) | 4, 6, 8, 13, 17, 26 or 52 weeks, depending on the current offering schedule | Issued at face value or a discount; return is reflected in the difference between price and maturity value | Principal paid at maturity; no periodic coupon |
| Treasury notes (T-notes) | 2, 3, 5, 7 or 10 years | Fixed rate established at auction | Interest every six months plus principal at maturity |
| Treasury bonds (T-bonds) | 20 or 30 years | Fixed rate established at auction | Interest every six months plus principal at maturity |
| Treasury Inflation-Protected Securities (TIPS) | 5, 10 or 30 years | Fixed coupon applied to principal adjusted for CPI-U changes | Interest every six months; adjusted principal at maturity subject to Treasury's floor |
| Floating Rate Notes (FRNs) | 2 years | Rate resets using the highest accepted discount rate in 13-week bill auctions plus a spread | Interest quarterly; principal at maturity |
Treasury also supports STRIPS, which separate eligible notes, bonds and TIPS into individual principal and interest components. STRIPS are held and traded through financial institutions rather than purchased directly as separate new securities through TreasuryDirect.
Marketable Treasuries versus savings bonds
Series EE and Series I savings bonds are non-marketable. They are registered securities with purchase limits and redemption rules, and their owners cannot sell them to other investors. Marketable Treasury securities have no I-Bond-style annual purchase cap and can fluctuate in price when traded.
| Feature | Marketable Treasury security | Series I savings bond |
|---|---|---|
| Acquisition | Auction through TreasuryDirect or a financial institution; secondary market through brokers | Electronic purchase through an eligible TreasuryDirect account |
| Price behavior | Can trade above or below par | No secondary-market quotation; accrues under savings-bond rules |
| Exit before maturity | Sell at the available market price | Redeem only after 12 months; three-month interest penalty before five years |
| Interest structure | Depends on bill, fixed coupon, TIPS or FRN terms | Fixed component plus semiannual inflation component |
Our I Bonds guide explains the savings-bond formula and restrictions in detail.
How a Treasury auction works
Treasury auctions follow a public sequence. Exact closing times, security terms and issue dates appear in each official announcement.
- Announcement. Treasury identifies the security, offering amount, auction date, issue and maturity dates, bidding deadlines and other terms.
- Bidding. Participants submit competitive or noncompetitive bids through approved channels. TreasuryDirect accepts noncompetitive bids from individual account holders.
- Award and pricing. Treasury accepts noncompetitive bids and then competitive bids according to the auction procedure. Accepted competitive bidders and noncompetitive bidders receive the same single price, yield, rate or spread determined by the auction.
- Issuance. Securities are issued on the scheduled date. The purchaser receives the specified security rather than choosing a coupon in advance.
Noncompetitive bids
A noncompetitive bidder specifies an amount and agrees to accept the yield, rate, discount margin or spread determined by the auction. This avoids bidding a particular yield, but it does not guarantee a particular return before the auction result is known.
Competitive bids
A competitive bidder specifies both an amount and the yield, rate or discount margin it is willing to accept. A bid may be awarded in full, partially or not at all depending on the auction cutoff and award process. Competitive participation is generally associated with institutions and dealers rather than a standard TreasuryDirect individual account.
How to read auction results
Auction releases contain more than a single interest rate. The high yield or high rate helps determine pricing for accepted bids. The price, coupon, issue date and maturity date work together to define the cash flows.
- High yield or high rate: the highest accepted yield or rate in the auction, used under the single-price procedure.
- Bid-to-cover ratio: the amount bid divided by the amount accepted. It describes auction demand, but comparisons should account for market conditions and offering size.
- Competitive versus noncompetitive awards: shows how awards were distributed between bid types.
- Primary dealer and investor categories: provide additional context about allotment, not a simple trading signal.
- “Tail”: market participants may compare the auction stop with the secondary-market level shortly before the deadline. This is a short-term microstructure measure, not a measure of Treasury credit quality.
When a fixed-principal security is issued below or above par, the yield incorporates that price difference. As with existing bonds, coupon and yield are separate measurements. See how bond prices and yields interact.
What happens in the secondary market?
After issuance, investors can trade marketable Treasuries through brokers and dealers. “On-the-run” securities are the most recently issued benchmarks for a maturity; older issues become “off-the-run.” On-the-run securities often trade more actively, while older issues can have different liquidity and pricing characteristics.
A buyer may see a bid price, at which a dealer is prepared to buy, and an ask or offer price, at which a dealer is prepared to sell. The bid-ask spread is a transaction-cost component. Yields move inversely to prices, so a falling price means a rising yield for a conventional fixed-rate security.
Secondary-market yields influence mortgage, corporate and municipal borrowing rates, valuations and policy analysis. They do not represent an administratively fixed rate for every loan: credit spreads, collateral, contract terms and market segmentation also matter.
A closer look at TIPS and FRNs
TIPS: inflation-adjusted principal
TIPS principal rises with inflation and falls with deflation according to the index ratio. The fixed coupon itself does not change, but the dollar interest payment changes because it is calculated on adjusted principal. At maturity, Treasury pays the greater of the inflation-adjusted principal or the original principal. Before maturity, however, a sale can occur at a price below the original amount.
TIPS therefore address a different risk from nominal Treasuries, but they still have real-yield, market-price and tax considerations. Accrued inflation adjustments can have annual federal tax consequences even before the adjusted principal is received, sometimes described informally as “phantom income.” See the tax guide.
FRNs: resetting coupons
FRN interest rates reset using the specified 13-week Treasury bill auction reference plus the spread determined at issuance. Quarterly payments can rise or fall with the reference rate. Because coupons reset, FRNs generally have different interest-rate price sensitivity from long fixed-rate notes, but they are not free of price, liquidity or reinvestment considerations.
Why the Treasury yield curve matters
The yield curve shows yields across maturities at a specific time. Analysts use it as a benchmark for discounting cash flows and comparing other debt. An upward slope means longer yields are higher than shorter ones; an inversion means some shorter yields exceed longer ones.
The curve reflects multiple forces: expected policy rates, inflation, economic growth, risk premiums, issuance and demand. An inversion is not a mechanical instruction to buy or sell a security, and no single curve point describes the entire market.
Risks that remain even with U.S. government backing
- Interest-rate risk: fixed-rate market prices can fall when yields rise, particularly for longer-duration securities.
- Inflation risk: fixed nominal payments can lose purchasing power.
- Reinvestment risk: future coupons or maturing principal may be reinvested at lower rates.
- Liquidity and transaction costs: execution prices and spreads vary by issue and market conditions.
- Tax considerations: interest is generally federally taxable even though state and local income tax exemption applies.
- Political and operational events: debt-limit disputes or settlement disruptions can affect market conditions even when contractual backing remains stated.
“Backed by the full faith and credit of the United States government” describes the issuer's obligation. It does not mean a market price cannot decline before maturity or that a fund holding Treasuries has a stable share value.
Frequently asked questions
Are Treasury bills, notes and bonds all savings bonds?
No. Bills, notes and marketable bonds are auctioned securities that can trade before maturity. EE and I savings bonds are separate, non-marketable products with their own purchase and redemption rules.
Do individual investors choose the coupon at auction?
No. The auction establishes pricing under the offering rules. A noncompetitive bidder accepts the resulting yield, rate or spread rather than selecting it in advance.
Can a Treasury security lose value?
Its market price can fall before maturity. A conventional security held to a performing maturity still pays according to its terms, but inflation, taxes and opportunity cost affect the economic result.
What is the difference between TIPS and I Bonds?
TIPS are marketable and adjust principal; I Bonds are non-marketable and use a composite interest rate. TIPS can fluctuate in market price, while I Bonds have an annual purchase cap and redemption restrictions.
Why does an older Treasury have a different yield from a new one?
Different coupons, prices, remaining maturities and liquidity produce different yields. “On-the-run” benchmark status also affects trading activity.
Official sources and further reading
- TreasuryDirect — About Treasury Marketable Securities: bills, notes, bonds, TIPS, FRNs and STRIPS.
- TreasuryDirect — How Auctions Work: announcement, bidding, awards and issuance.
- TreasuryDirect — Auction Schedules: current offering patterns and official announcements.
- TreasuryDirect — Treasury Bonds: terms and differences from savings bonds.
- FINRA — Bonds: coupons, trading and fixed-income risks.
Offering schedules and operational rules can change. Reviewed November 5, 2026; confirm current terms in each Treasury announcement.