Financial encyclopedia

In the era of increasing global economic uncertainty, seeking stable investment tools to protect wealth is an important goal for many investors, and gold and American debt are widely regarded as two safe-haven assets. U.S. Treasuries are issued by the U.S. federal government to finance government expenditures and endorsed by the government's credit. Mainly divided into the following categories:

Treasury bills (T-Bills)

Duration: short-term, the duration is less than one year, and the common ones are 4 weeks, 13 weeks, 26 weeks and 52 weeks.

Features: Treasury bonds are issued at a price lower than par value, and paid at par value at maturity. Investors' income comes from the difference between the purchase price and the face value. T-Bills does not pay interest regularly (that is, zero coupon bond).

Treasury notes (T-Notes)

Term: medium term, with a term of 2 years, 3 years, 5 years, 7 years and 10 years.

Features: Treasury bills pay fixed interest once every six months, and the principal is paid in face value at maturity. Due to the long term of T-Notes, its rate of return is usually higher than that of T-Bills.

Treasury bonds (T-Bonds)

Duration: Long term, with a duration of 20 or 30 years.

Features: Treasury bonds are similar to treasury bills, with fixed interest paid once every six months, and the principal paid in face value at maturity. Because T-Bonds have the longest term, its yield is usually higher than other types of national debt.

Treasury inflation-protected securities (TIPS)

Term: 5 years, 10 years and 30 years.

Features: The principal of TIPS will be adjusted according to the US Consumer Price Index (CPI) to cope with inflation. The interest payment of TIPS is based on the adjusted principal, so it can help investors protect their purchasing power in an inflationary environment. At maturity, investors will receive the higher of the adjusted principal or the initial principal.

Savings Bonds (savings bonds)

Category: mainly including series EE bonds and series I bonds.

Series EE bonds: fixed interest rate, usually for individual investors. The investment period is as long as 30 years and can be redeemed if it is held for at least 1 year, but there will be interest loss if it is redeemed within 5 years.

Series I bonds: composed of fixed interest rate and variable interest rate adjusted according to inflation, providing protection against inflation.

Floating rate notes (FRNs)

Duration: 2 years.

Features: The interest rate of FRNs is adjusted every three months, based on the yield of the latest 13-week Treasury bonds. They provide protection against interest rate changes and are suitable for investors who are worried about rising interest rates.

These types of bonds have their own characteristics and are suitable for investors with different risk tolerance and investment periods.