Negotiable debt obligations of the U.S. Government, secured by its Full Faith and Credit and issued at various schedules and maturities. The income from Treasury securities is exempt from state and local, but not federal, taxes.
1. Treasury bills-short-term securities with maturities of one year or less issued at a discount from Face Value. Auctions of 91-day and 182-day Bills take place weekly, and the yields are watched closely in the money markets for signs of interest rate trends. Many floating-rate loans and variable-rate mortgages have interest rates tied to these bills. The Treasury also auctions 52-week bills once every four weeks. At times it also issues very short-term cash management bills, Tax Anticipation Bills, and treasury certificates of indebtedness. Treasury bills are issued in minimum denominations of $10,000, with $5,000 increments above $10,000 (except for cash management bills, which are sold in minimum $10 million blocks). Individual investors who do not submit a Competitive Bid are sold bills at the average price of the winning competitive bids. Treasury bills are the primary instrument used by the Federal Reserve in its regulation of Money Supply through Open Market Operations. See also Dutch Auction-Repurchase Agreement.
2. Treasury bonds-long-term debt instruments with maturities of 10 years or longer issued in minimum denominations of $1,000.
3. Treasury notes-intermediate securities with maturities of 1 to 10 years. Denominations range from $1,000 to $1 million or more. The notes are sold by cash subscription, in exchange for outstanding or maturing government issues, or at auction.
