What it is
Treasury bonds, often called T-bonds, are a fundamental component of the U.S. government's debt financing. When investors purchase a Treasury bond, they are lending money to the federal government. In return, the government promises to pay fixed interest payments, known as coupon payments, every six months until the bond matures. At maturity, the investor receives the original principal amount back. They are considered among the safest investments globally due to the backing of the U.S. government.
Treasury bond yields serve as a benchmark for many other interest rates in the economy, including mortgage rates and corporate bond yields. Changes in demand or economic outlook can cause their prices to fluctuate, which in turn affects their yields. For example, increased demand during economic uncertainty can drive prices up and yields down, reflecting their safe-haven asset status. Investors monitor these yields for signals about inflation expectations and the overall health of the economy.
Why it matters
Treasury bonds are a safe-haven asset and their yields influence borrowing costs across the economy, impacting everything from mortgages to corporate loans.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice