Gov Bonds

U.S. Treasuries be like the U.S. gov's way of low-key borrowing cash to pay the bills and keep the lights on. 💡

These bad boys come with the full-blown trust of Uncle Sam himself, making them a go-to for all the chill investors out there. 😎

Because they're like, super safe, don't expect much when it comes to bank. Other bonds usually brag with higher returns. 📉

Kinds of U.S. Treasury debt out there:

• Treasury Bills (T-bills) be the short-term baes that peace out between a few days to 52 weeks. 🕒
• Treasury Notes (T-notes) stick around longer, maturing within ten years.
• Treasury Bonds (T-bonds) are like grandpas, chilling for 30 years, and there's a lil' paycheck every six months. 💸
• TIPS (Treasury Inflation-Protected Securities) are the bougie ones that switch up based on the Consumer Price Index vibes. TIPS be handing out interest on the reg every six months and they hang out for five, ten, or even 30 years. 📈

Types of Treasuries

You can snag new Treasuries at gov-led auctions or scoop up old ones in the secondary marketplace.

Treasury	Minimum denomination	Sold at	Maturity	Interest payments
US Treasury bills	$1,000	Discount	4-, 8-, 13-, 26-, and 52-week	Interest and principal paid at maturity
US Treasury notes	$1,000	Coupon	2-, 3-, 5-, 7-, and 10-year	Interest paid semi-annually, principal at maturity
US Treasury bonds	$1,000	Coupon	30-year	Interest paid semi-annually, principal at maturity
Treasury inflation-protected securities (TIPS)	$1,000	Coupon	5-, 10-, and 30-year	Interest paid semi-annually, principal redeemed at the greater of their inflation-adjusted principal amount or the original principal amount
US Treasury floating rate notes (FRNs)	$1,000	Coupon	2 years	Interest paid quarterly based on discount rates for 13-week treasury bills, principal at maturity
Treasury STRIPS	$1,000	Discount	6 months to 30 years	Interest and principal paid at maturity

Benefits of Buying Treasuries

Credit quality

When it comes to street cred, Treasuries flex with top-tier status backed by the full trust and might of the U.S. of A. 🇺🇸

This backing's lit 'cause of the government's power to tax and America's massive economy flex. 💪

But real talk, back in August 2011, the vibe dropped a bit when Standard & Poor's hit the U.S. with a AA+ rating downgrade, citing concerns about the sky-high budget deficit. 😬

Tax advantages

Interest income from Treasuries is like, free from state and local taxes, but Uncle Sam still wants his cut. 😏

Heads up though, some returns might be taxable when sold or matured.

Buying bonds on the cheap in the secondary market? Profit may get the taxman's attention if you hold till maturity or sell with gains.

Copping a bond at a market discount is a whole different game compared to an OID buy.

Sell or mature a bond? Gains from market discounts are like capital gains, while OID gains count as income. 💰

Liquidity

Treasuries swap hands 24/7 from big wigs and everyday investors, making them pretty darn liquid. 🌊

If you're peeping Treasuries, auctions and secondary markets are where it's at, loaded with bids and offers all day. 📈

Spreads are pretty tight, but beware! During crucial economic reveals, Treasuries can level up the hype. 🚀

Choice

Choices are vast, from 4-week to 30-year Treasuries, and those with longer runs typically strut higher coupon rates. 💸

Treasuries show up in cool trims, like coupon bonds, zero-coupon gang, and TIPS that vibe with consumer price index trends. 🔄

Risks of Buying Treasuries

Lower yields
Treasuries play safe, but with lower pay rates than the wild boys of the securities world.

Interest rate risk
Treasuries dance to interest rate changes. The longer they groove, the wilder the ride. As rates climb, expect prices to dip. 📉

Inflation risk
Got low yields? Treasuries may earn less than inflation but no TIPS on this bus. 🚍

Credit or default risk
All bonds pack default risk. Keep an eye on breaking news, national debt ratios, yields, credit scores, and dollar strength to swerve potential risk spikes.

Coupon or No Coupon

T-bills with a short lifespan (like 1 to 10 yrs) and long-lasting T-bonds (up to 30 yrs) serve up interest payments aka coupons, on the reg.

The coupon rate locks in at launch, dropping cash every six months. 💵

No-regular-coupon squad includes Treasury bills (one year or less) or zero-coupon bonds.

Instead, they're retailing at a cut-price, below face value. 💸

Investors cash out at face value on maturity, with OID bonds paying all interest in one fat lump sum, bridging the difference between the initial deal and face value. 🏦