Treasury Bills, Notes and Bonds: How US Government Debt Works

Treasury bills, notes and bonds are debt the US government sells at auction, told apart by maturity: bills up to a year, notes 2 to 10 years, bonds 20 or 30.

All three are loans to the US government, sold by the Treasury Department and traded afterwards between investors. This page covers how the three differ, how much of each is outstanding, how a bill is priced compared with a note or bond using real auction results, how the Treasury yield curve is built from them, and where to follow that curve in Kresmion's data. It is descriptive throughout.

The three types, side by side

The Treasury describes each security on TreasuryDirect, its retail sales site. The basic difference is the term, and with it the way interest is paid.

A reopening sells more of an existing security, with the same maturity date and coupon, rather than creating a new one.

The three share several features. Each can be bought in amounts from $100, in steps of $100. Interest on all three is subject to federal income tax but exempt from state and local income tax. And each can be held to maturity or sold before it in the market. Treasury Bonds are also different from US savings bonds such as EE and I Bonds, which TreasuryDirect describes as non-marketable: each is registered to one person, and it cannot be sold to anyone else.

Two more marketable types complete the set. Treasury Inflation-Protected Securities (TIPS), sold for 5, 10 and 30 years, have a principal that rises with inflation and falls with deflation. At maturity the holder receives the greater of the adjusted principal and the original amount, and the yield on them is the real yield. Floating Rate Notes mature in two years and pay interest every three months at a rate tied to the most recent 13-week bill auction plus a fixed spread.

How much of each is outstanding

The Treasury's Monthly Statement of the Public Debt splits marketable debt by type. On 31 August 2026 it totalled $31.83 trillion.

Notes make up just over half of marketable debt, and bills turn over fastest: the Treasury rolls 4-week bills over about 13 times a year. Who holds the debt is a separate question. Foreign holders are covered in what TIC data shows, and the Federal Reserve's holdings in what quantitative easing and tightening are.

How a bill is priced: a real auction

A bill pays no coupon. The buyer pays less than face value and receives face value at maturity, and the difference is the interest. The Treasury publishes two rates for each bill auction, and they differ for a reason that confuses many readers.

On 28 September 2026 the Treasury auctioned a 26-week bill, listed in the results as a 182-day bill, issued on 1 October 2026 and maturing on 1 April 2027. The results, per $100 of face value:

• High rate (discount rate): 4.285%. The Treasury's bill formula is price = face value x (1 minus discount rate x days / 360). Here that is 100 x (1 minus 0.04285 x 182 / 360) = 97.833694.
• Price: 97.833694. A buyer at the high rate pays $97.833694 and receives $100 on 1 April 2027, a gain of $2.166306.
• Investment rate: 4.441%. The gain divided by the price actually paid, scaled to a 365-day year: 2.166306 / 97.833694 x 365 / 182 = 4.441%.

The discount rate measures the gain against face value over a 360-day year. The investment rate measures it against the money actually paid over a 365-day year, which makes it comparable with the yield on a note or a bond. That is why the investment rate is the higher of the two whenever a bill sells below face value. The price formula applies to every bill. The investment-rate formula above applies to bills of up to a half-year; for longer bills, such as the 52-week, the Treasury uses one that allows for compounding. For any bill, the year counts 366 days when it includes 29 February.

How notes and bonds are priced: three more auctions

A note or a bond carries a coupon, fixed at auction for its whole life. Its price then sets the yield. When the yield bid at auction is above the coupon, the security sells below face value, and when it is below the coupon, above face value. That is the price and yield relationship explained in what a bond is.

In each of these new issues the coupon sat just below the auction yield, so each sold slightly below $100. The same gap costs more on a longer security. The 30-year sold about $1.37 below face value for a yield about 9 basis points above its coupon, roughly 15 cents per $100 for each basis point. The 2-year sold about 7 cents below for a gap of under 4 basis points, roughly 2 cents per basis point. That greater sensitivity of long securities to yields is what bond duration measures.

From auctions to the yield curve

Each business day the Treasury publishes par yield curve rates at fourteen maturities from 1 month to 30 years: for each maturity, the yield at which a security of that term would price at face value. Its inputs are price quotes, collected by the New York Fed at or near 3:30 p.m., for the most recently auctioned bills, notes and bonds, which the market calls on-the-run securities. Plotted against maturity, these make the Treasury yield curve, whose shapes are covered in what the yield curve shows.

On 29 September 2026 the Treasury's curve read 4.04% at 1 month, 4.25% at 3 months, 4.89% at 2 years, 5.26% at 10 years, 5.64% at 20 years and 5.59% at 30 years. The 20-year point sat above the 30-year one that day, a detail that a curve made only from the 2-year and 10-year would miss.

Kresmion's free yield curve tool plots eleven of those maturities, from 1 month to 30 years. It reads them from the Federal Reserve's H.15 release of Treasury yields at fixed maturities, which carried the same values as the Treasury's curve on 29 September 2026. It shows the latest curve against the curve from a year earlier, with the 2-year to 10-year spread and an inversion flag. A free account adds three views. The first compares the curve with any published day in the archive, with a change table for each maturity in basis points. The earliest curve it draws is from July 1969, when six of the eleven maturities were published, and early curves carry fewer points: the 30-year starts in 1977, the 3-month in 1981 and the 1-month in 2001. The second is a monthly animation of the curve through a chosen range, and the third the 2-year to 10-year or 3-month to 10-year spread with every inverted stretch shaded.

One caution when comparing pages. Kresmion's money markets page lists Treasury bill rates on a discount basis, while the yield curve tool uses investment-basis yields. On 29 September 2026 the 3-month bill read 4.07% on the first and 4.25% on the second. The figures describe the same part of the market in two different conventions, plus the difference between a single bill and a constant-maturity point, so the two are not directly comparable.

Honest limitations

The auction results on this page are single events: each records the yield at which the Treasury sold that day, and a security's yield moves every trading day afterwards. The outstanding amounts are one month's statement and change with every auction and maturity. The curve figures are one day's readings. Kresmion's tool shows eleven of the Treasury's fourteen maturities, so the 6-week, 2-month and 4-month points are not on it. The tax treatment described here is the general rule from TreasuryDirect; a reader's own position depends on circumstances this page does not cover.

Key takeaways

Frequently asked questions

What is the difference between a Treasury bill, note and bond?

The term and the way interest is paid. Bills run from 4 to 52 weeks and pay no coupon: they are bought below face value and repaid at face value. Notes run 2 to 10 years and bonds 20 or 30 years, and both pay a fixed coupon every six months.

Why is a bill's investment rate higher than its discount rate?

The discount rate divides the gain by face value and uses a 360-day year. The investment rate divides the same gain by the lower price actually paid and uses a 365-day year, so it comes out higher. In the 28 September 2026 26-week auction the two were 4.285% and 4.441%.

Are Treasury Bonds the same as savings bonds?

No. Treasury Bonds are marketable 20-year and 30-year securities that can be sold before maturity. Savings bonds such as EE and I Bonds are non-marketable: each is registered to one person and cannot be sold to someone else.

Can you lose money on a Treasury note or bond?

Yes, if it is sold before maturity at a lower price than was paid. Prices fall when yields rise, and the longer the security, the larger the fall for the same move in yields. Held to maturity, a note or bond repays its face value, which is still a loss for a buyer who paid more than face value, and inflation above the yield cuts what the payments buy.

Does the yield curve show where rates are going?

Not as a forecast. The curve records yields agreed between buyers and sellers on a given day, and longer yields reflect what the market prices for future short rates plus a term premium for lending longer. Some shapes have preceded some recessions, which is why they are watched, but a market price and a past association are not a forecast.

This page is information, not investment advice.

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Source: TreasuryDirect, Treasury Bills, https://www.treasurydirect.gov/marketable-securities/treasury-bills/ , Treasury Notes, https://www.treasurydirect.gov/marketable-securities/treasury-notes/ , Treasury Bonds, https://www.treasurydirect.gov/marketable-securities/treasury-bonds/ , TIPS, https://www.treasurydirect.gov/marketable-securities/tips/ , Floating Rate Notes, https://www.treasurydirect.gov/marketable-securities/floating-rate-notes/ , and Understanding Pricing and Interest Rates, https://www.treasurydirect.gov/marketable-securities/understanding-pricing/ ; Treasury auction results: 26-week bill, 28 September 2026, https://www.treasurydirect.gov/instit/annceresult/press/preanre/2026/R_20260928_1.pdf , 2-year note, 22 September 2026, https://www.treasurydirect.gov/instit/annceresult/press/preanre/2026/R_20260922_2.pdf , 10-year note, 12 August 2026, https://www.treasurydirect.gov/instit/annceresult/press/preanre/2026/R_20260812_2.pdf , 30-year bond, 13 August 2026, https://www.treasurydirect.gov/instit/annceresult/press/preanre/2026/R_20260813_3.pdf ; US Treasury, Monthly Statement of the Public Debt, Summary of Treasury Securities Outstanding, 31 August 2026, https://fiscaldata.treasury.gov/datasets/monthly-statement-public-debt/summary-of-treasury-securities-outstanding ; 31 CFR Part 356, Appendix B (bill investment rate formulas, including bills of more than one half-year), https://www.ecfr.gov/current/title-31/subtitle-B/chapter-II/subchapter-A/part-356/appendix-Appendix%20B%20to%20Part%20356 ; TreasuryDirect, Treasury Marketable Securities (marketable and non-marketable), https://www.treasurydirect.gov/marketable-securities/ ; US Treasury, Treasury Yield Curve Methodology, https://home.treasury.gov/policy-issues/financing-the-government/interest-rate-statistics/treasury-yield-curve-methodology ; US Treasury, Daily Treasury Par Yield Curve Rates, September 2026, https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202609 ; shares and price gaps computed by Kresmion from those figures ; Kresmion yield curve tool (Federal Reserve H.15 via FRED) and money markets page, observed 29 September 2026.

Kresmion Research.