Treasury.
In plain English
A Treasury is an IOU from the US federal government, sold to borrow money and repaid with interest. They come in three main lengths: bills mature in a year or less, notes in two to ten years, and bonds in twenty to thirty. Because the government can tax and issue currency, Treasuries are treated as nearly free of default risk, which is why their yields set the baseline for interest rates across the economy. The word also refers to the Treasury Department, which issues them.
01Why it matters
Treasury yields are the benchmark that mortgage, savings, and loan rates move against, so they shape borrowing costs far beyond the government itself.
02The math, step by step
You buy a 1,000 dollar one-year Treasury bill yielding 4 percent. A year later the government pays back your 1,000 dollars plus about 40 dollars in interest.
03What this is NOT
A Treasury is NOT a corporate bond. It is issued by the federal government and carries far less default risk, which is why it usually pays less than a company's bond.