Treasury bond.
In plain English
Treasury bonds (often called T-bonds or 'long bonds') are U.S. government debt with maturities of 20 or 30 years. They pay a fixed coupon (interest payment) every six months and return the face value at maturity. T-bonds are backed by the full faith and credit of the U.S. government and exempt from state and local income tax. The 30-year yield is one of the most-watched long-term interest rates in the world.
01Why it matters
Long bonds are the highest-duration risk position retail investors typically take. When interest rates rise, the price of a 30-year bond falls sharply (a 1% rate increase can take 15% to 20% off the price); when rates fall, the price rises by similar amounts. They are not the safe ballast many people think, despite being credit-risk-free.
02The math, step by step
In 2022, the iShares 20+ Year Treasury Bond ETF (TLT) fell about 31% as the Fed raised rates from near 0 to over 4%. Investors who treated long-bond ETFs as a low-risk safe haven discovered the duration risk in real time.
03What this is NOT
T-notes are 2 to 10 year maturities. T-bonds are 20 to 30 year maturities. T-bills are 1 year or less. All three are U.S. government debt; only the maturity differs.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice