What it is
Treasury bills are considered among the safest investments globally because they are backed by the full faith and credit of the U.S. government. They are sold at a discount to their face value and do not pay explicit interest payments. Instead, the investor receives the face value at maturity, with the difference between the purchase price and face value representing the return. Common maturities include 4, 8, 13, 17, 26, and 52 weeks.
T-bills are a critical component of the money market and are widely used by financial institutions for short-term liquidity management. Their yields are highly sensitive to the Federal Reserve's federal funds rate, making them a direct reflection of short-term interest rate policy. News reports often refer to T-bill yields as a benchmark for risk-free short-term borrowing costs. Demand for T-bills can surge during times of market uncertainty, as investors seek safe-haven assets.
Why it matters
T-bills offer a low-risk way to invest short-term cash and their yields provide a real-time gauge of the Federal Reserve's immediate interest rate policy.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice