Treasury Securities — T-Bills, T-Notes, T-Bonds, TIPS & Savings Bonds

Treasury securities are the federal government's primary borrowing instrument — debt obligations issued by the Department of the Treasury to finance federal expenditures beyond what tax revenues cover. When you buy a T-bill, T-note, T-bond, TIPS, or savings bond, you're lending money to the U.S. government. Treasury securities are backed by the full faith and credit of the United States, exempt from state and local income taxes, and considered the world's benchmark risk-free investment. The outstanding public debt as of 2026 is approximately $36 trillion, with Treasury issuing hundreds of billions in new securities each week to finance ongoing operations and roll over maturing debt.

Current Law (2026)

Legal Authority

• 31 U.S.C. § 3101 — Public debt limit: establishes the statutory debt ceiling — the maximum face amount of obligations the Treasury may have outstanding; Secretary may not exceed without congressional action
• 31 U.S.C. § 3102 — Bonds: Secretary may issue long-term bonds to finance authorized expenditures; issued with presidential approval; may be purchased by the public and government trust funds
• 31 U.S.C. § 3103 — Notes: mid-term obligations (2-10 years); same authority and procedures as bonds
• 31 U.S.C. § 3104 — Certificates of indebtedness and Treasury bills: short-term instruments; T-bills issued on a discount basis (no coupon; investor receives face value at maturity)
• 31 U.S.C. § 3105 — Savings bonds and savings certificates: retail-oriented securities available to individuals; non-marketable (cannot be resold; only redeemable with Treasury); special programs for employers and education savings
• 31 U.S.C. § 3121 — Issuance procedures: Secretary prescribes terms including interest basis (interest-bearing or discount), auction or direct sale, denominations, maturity dates, and redemption rights
• 31 U.S.C. § 3123 — Payment pledge: the faith of the United States is pledged to pay principal and interest on government obligations; Secretary pays interest as due; may pay in advance
• 31 U.S.C. § 3124 — Tax exemption: Treasury obligations are exempt from state and local taxation — this federal preemption makes Treasury securities uniquely attractive in high-tax states

Implementing Regulations

• 31 CFR Part 353 — Regulations Governing Definitive United States Savings Bonds, Series EE and HH: the complete regulatory framework for paper savings bonds, covering everything from ownership registration and annual purchase limits to what happens when a bondholder dies. Note: this Part governs only definitive (paper) bonds; electronic TreasuryDirect bonds are governed by 31 CFR Part 363. Key provisions:

  • § 353.0 — Scope: applies to paper Series EE bonds (issue date January 1, 1980 or later) and paper Series HH bonds (last issued 2004; mature 20 years from issue date); does NOT cover electronic bonds held in TreasuryDirect accounts, which have different rules
  • § 353.10 / § 353.11 — Annual purchase limits: no person may purchase and hold more than $10,000 face value of Series EE and HH bonds combined in any calendar year; purchases in individual, fiduciary, and employee-plan capacities are computed separately; employee thrift and savings plans operated by employers for employees' exclusive benefit may have higher limits
  • § 353.15 / § 353.16 — Non-transferability and non-pledgeability: savings bonds may not be sold, transferred, or assigned to another person except in specific circumstances described in the regulations (estate transfers, gifts to minors, certain institutional transactions); bonds may not be pledged as collateral for a loan — a private lender cannot take a savings bond as security, and a bank cannot hold it as a lien; this is a significant protection against predatory lending
  • § 353.20 — Judicial proceedings: courts may not recognize a voluntary transfer of savings bonds inter vivos (during life) that is not authorized by the regulations; a divorce court cannot order a spouse to sign over savings bonds to the other spouse through a private transaction — the correct procedure is to request reissue through Treasury following the regulations; judicial attachment or garnishment of savings bonds by private creditors is generally not recognized, though federal tax liens may reach them; state courts ordering "transfer" of bonds to satisfy private debts cannot compel Treasury compliance except through authorized procedures
  • § 353.30 — Series EE interest: EE bonds were issued at a discount; interest accrues and compounds and is payable only at redemption as part of the redemption value (not as periodic payments); current interest rates and redemption value tables are published in 31 CFR Part 351; the guaranteed-to-double-in-20-years feature is provided by Treasury making a one-time supplement at 20 years if accumulated interest falls short
  • § 353.31 — Series HH interest: HH bonds (no longer sold) were issued at face value (par) and paid current income — semiannual interest payments — for 20 years; holders of HH bonds continue to receive semiannual interest payments until the bond matures or is redeemed
  • Subpart F — Relief for lost, stolen, destroyed, or defaced bonds: Treasury will replace lost or destroyed savings bonds upon request and appropriate proof; definitive bonds replaced with electronic bonds in TreasuryDirect; there is no statute of limitations on redeeming savings bonds — they are payable even after final maturity (though interest stops accruing)
  • Subpart L — Deceased owner/coowner/beneficiary (§§ 353.70–353.71): when a bondholder dies, the outcome depends on registration:
    • Single owner: bond belongs to the decedent's estate; the legal representative may request payment
    • Coowner (two names joined by "OR"): the surviving coowner becomes the sole owner and may redeem or request reissue without going through probate — a common estate-planning use of savings bonds
    • Beneficiary/POD (one name "payable on death" to another): if the owner dies, the named beneficiary (if living) becomes the sole owner; if the beneficiary also died before the owner, the bond falls to the owner's estate
  • Subpart O — State escheat claims: unclaimed savings bonds are subject to state unclaimed property laws after the bond stops earning interest and the owner cannot be located; Treasury cooperates with states in processing these claims

• 31 CFR Part 359 — Regulations Governing United States Savings Bonds, Series I (the complete framework for I bonds — the retail inflation-hedging savings bond): Key provisions:

  • § 359.10 — Fixed rate: the Secretary sets a fixed rate of return for each six-month period when new I bonds are issued; once set, the fixed rate applies to that bond for its 30-year life and is always ≥ 0%; the fixed rate is typically announced in May and November alongside the new CPI-based variable rate
  • § 359.11 — Semiannual inflation rate: the variable component is the change in the non-seasonally adjusted Consumer Price Index for All Urban Consumers (CPI-U) for the six-month period ending in March (for the May announcement) and September (for the November announcement); published by BLS and applied by Treasury as the "semiannual inflation rate"
  • § 359.12 — Deflation adjustment: if the CPI-U decreases, the semiannual inflation rate is negative; a negative semiannual rate reduces the composite rate for that period, but the composite rate cannot go below zero — in a deflationary period, an I bond earns 0% rather than losing value; any deflation that reduces the composite rate can be offset by future positive CPI periods
  • §§ 359.13–359.14 — Composite rate formula: the composite rate for each semiannual period is calculated as: {Fixed + (2 × Semiannual) + (Fixed × Semiannual)}, where Fixed is the bond's lifetime fixed rate and Semiannual is the current six-month CPI adjustment; the doubling of the semiannual rate in the formula reflects that two such periods make a full year; the rate is rounded to the nearest hundredth of a percent
  • § 359.15 — Composite rate application: the composite rate is applied semiannually to the bond's value; each bond has a fixed anniversary date (based on issue month), and the rate resets every six months from that date — not on a calendar-year basis; a bond issued in October applies the current composite rate from October through March, then the next announced rate from April through September
  • § 359.16 — Interest accrual: interest accrues on the first day of each month, adding to the bond's current value; because interest compounds monthly (but is not paid until redemption), the bond grows month by month
  • § 359.17 — When interest is payable: interest is payable only upon redemption — I bonds do not make periodic interest payments; the investor receives all accrued interest (inclusive of inflation adjustments) as a lump sum when they redeem the bond
  • §§ 359.25, 359.34 — Paper bonds discontinued: paper I bonds in denominations of $50 to $10,000 were sold at banks and other financial institutions, but over-the-counter paper bond sales were discontinued January 1, 2012; paper I bonds can now only be obtained by directing an IRS federal income tax refund to bond purchase (Form 8888), up to $5,000 in addition to the electronic limit
  • § 359.45 — Book-entry bonds: all electronic I bonds are held in TreasuryDirect accounts (not in brokerage accounts; not transferable to a brokerage); minimum purchase is $25 for book-entry bonds; bonds are sold at par (face value), not at a discount
  • § 359.50 — Annual purchase limit: cross-references 31 CFR § 363.52, which limits each Social Security number or TIN to $10,000 per calendar year in electronic I bonds through TreasuryDirect; a separate $5,000 limit applies to paper bonds purchased via tax refund; couples may each purchase $10,000 individually; bonds purchased as gifts count toward the recipient's annual limit in the year they are delivered (not the year purchased)

  The composite rate structure means I bond returns fluctuate widely depending on CPI. The 2021-2022 I bond surge (composite rates reaching 9.62% annualized) illustrated both the appeal and the limitation: the variable rate resets every six months, so high rates are temporary, and the $10,000 per-person annual cap constrains large-scale inflation hedging. Unlike TIPS (which trade on the secondary market at market prices), I bonds cannot be sold — they can only be redeemed with Treasury after the 12-month minimum holding period, with forfeiture of 3 months' interest for redemptions before 5 years.

  Recent rulemakings: No structural amendments to Part 359 in the 2022-2026 period; Treasury has updated the fixed and semiannual rates semiannually as required.

• 31 CFR Part 315 — Regulations Governing U.S. Savings Bonds, Series A, B, C, D, E, F, G, H, J, and K, and U.S. Savings Notes (68 sections — the regulatory framework for the legacy series savings bonds issued from the 1930s through the 1980s, covering bonds that predate the modern Series EE/HH program):

  • §§ 315.15–315.16 — Non-transferability and non-pledgeability: these legacy savings bonds, like their modern EE/HH successors, are strictly non-transferable and may not be pledged as collateral; Treasury will not recognize any voluntary transfer that is not specifically authorized by the regulations; a private lender cannot hold a Series E or Series H bond as loan security, and a court cannot order one spouse to sign over savings bonds to the other through a private transaction — only Treasury-authorized reissue procedures accomplish a change of ownership
  • §§ 315.20–315.22 — Judicial determinations: Treasury recognizes certain court orders affecting savings bonds, including: divorce decrees that ratify or confirm a property settlement assigning bonds to one party (§ 315.22 — the proper mechanism for dividing savings bonds in divorce, requiring a Treasury reissue rather than a private transfer); payment to judgment creditors who have levied on bonds through a court proceeding (§ 315.21); Treasury does not recognize private assignments or voluntary transfers, and a court cannot compel Treasury to comply with a private order; the correct path is always a Treasury reissue following regulatory procedures
  • § 315.30 — Series E bonds: the original retail savings bond, issued from 1941 (including the famous WWII war bonds) through 1980; Series E bonds are discount securities — issued at 75% of face value and redeemable at face at maturity; interest accrues and compounds at intervals and is payable only at redemption; all Series E bonds have matured and no longer earn interest, but they remain redeemable at Treasury (there is no expiration date on redemption — the government's obligation never lapses)
  • § 315.31 — Series H bonds: current income bonds (1952–1979); issued at face value (par) unlike the discount Series E; interest is paid semiannually as current income for the 20-year term; Series H bonds were the predecessor to Series HH bonds; all Series H bonds have matured and no longer earn interest, but holders continue to be entitled to redemption at par
  • § 315.32 — Series A, B, C, D, F, G, J, and K bonds: all of these legacy series have fully matured and no longer earn interest; bondholders who discover decades-old bonds in this series should redeem them promptly — no additional interest is accruing — by contacting the Bureau of the Fiscal Service or submitting to a Federal Reserve Bank; Treasury has no statute of limitations on redemption, but delaying redemption after maturity costs the holder additional interest that is not being earned
  • §§ 315.25–315.29 — Lost, stolen, or destroyed bond relief: the regulations provide a path to replacement for bondholders who have lost their definitive (paper) bonds; a claim must include the known serial number (or the best available identifying information) and a notarized request; Treasury adjudicates lost bond claims based on its own records and issues a substitute bond or direct payment; there is no time limit on filing a lost bond claim — bonds issued in the 1940s and 1950s that were lost and never redeemed remain Treasury obligations and can be replaced upon proper application

  The most practically significant regulatory protections for savings bond holders: (1) the non-pledgeability rule prevents savings bonds from being used as collateral in predatory lending schemes; (2) the judicial transfer restriction protects bonds from attachment by private creditors; and (3) the surviving coowner rule allows bonds to pass outside of probate to a coowner, providing a simple estate-planning tool accessible to all income levels.

• 31 CFR Part 321 — Payments by Banks and Other Financial Institutions of Definitive United States Savings Bonds and United States Savings Notes (30 sections — the regulations governing how banks, credit unions, and other qualified paying agents redeem paper savings bonds on behalf of customers). When a holder of a paper Series EE, Series I, or legacy series savings bond presents it for redemption at a financial institution rather than mailing it to Treasury, the institution pays out under Part 321's framework:

  • Qualified paying agents: not all banks may redeem savings bonds — institutions must become qualified paying agents by agreeing to the terms of the Offering Circular under 31 U.S.C. § 3105; most large commercial banks, credit unions, and thrifts qualify; institutions must have an ongoing relationship with the presenter and maintain records of redemptions
  • Identification requirement: paying agents must verify the identity of the presenter before redeeming bonds; acceptable identification includes government-issued photo ID; institutions bear responsibility for erroneous payments if they fail to verify identity or fail to compare the bond against the registrant's information
  • Coowner and beneficiary redemptions: when a bond is registered in two names (coowner or beneficiary format), the paying agent must follow Part 321's rules for which party may redeem and under what circumstances; a coowner (registered with "OR" between names) may generally redeem without the other coowner's presence; a beneficiary cannot redeem until the registered owner is deceased
  • Records and reporting: paying agents must maintain redemption records for 7 years and must report aggregate savings bond redemptions to the Bureau of the Fiscal Service as required; issuance of IRS Form 1099-INT for savings bond interest is required when bonds are redeemed (interest accrues over the bond's life and is taxable in the year of redemption)
  • Paying agent liability: if a paying agent pays an unauthorized person (through failure to verify identity or by paying a forged bond), the paying agent is liable to Treasury for the amount erroneously paid; Treasury has no obligation to honor payment of an unauthorized redemption made by a bank; this puts the risk of fraudulent redemptions on the financial institution, not on Treasury or the rightful bondholder

• 31 CFR Part 347 — Regulations Governing Retirement Savings Bonds (22 sections — Treasury's framework for a specialized category of savings bond designed specifically for workplace retirement savings programs, including state-administered auto-IRA programs). Part 347 is a relatively recent addition to the savings bond regulatory architecture, reflecting Congress's interest in using the familiar savings bond infrastructure to support retirement savings beyond the IRS-qualified plan system:

  • Subpart A — General Information (4 sections): defines Retirement Savings Bonds as U.S. savings bonds issued specifically for retirement savings purposes under Treasury's Offering Circular; the bonds are issued in electronic form through TreasuryDirect; Treasury may establish specific terms (interest rates, maturity terms, purchase limits) for Retirement Savings Bonds distinct from the standard Series EE and Series I bond terms
  • Subpart B — Treasury's Retirement Savings Program (7 sections): authorizes Treasury to operate a MyRA (My Retirement Account) program through TreasuryDirect — a no-fee, no-minimum, starter retirement savings account for workers who lack access to workplace retirement plans; the MyRA was implemented as a Roth IRA that invested exclusively in a Treasury Retirement Savings Bond (effectively a government-backed, inflation-protected savings instrument); the underlying investment is a special form of U.S. savings bond backed by Treasury; Congress authorized Treasury to market and promote the program to employers and employees; Note: Treasury launched the MyRA in 2017 and terminated the program in 2018 due to low enrollment — the regulatory framework remains in place but the program is not currently active
  • Subpart C — Auto-IRA Programs (8 sections): allows states and localities that operate automatic enrollment IRA programs (requiring employers to automatically enroll workers who lack employer-sponsored retirement plans) to use Treasury Retirement Savings Bonds as the default investment option for auto-IRA accounts; several states — including Illinois, California, and Oregon — have enacted auto-IRA laws; Part 347 enables these state programs to use Treasury-backed bonds as the default investment, providing workers with a government-guaranteed, low-risk starting point before selecting their own investment options; the employer facilitates payroll deduction contributions, which flow through the state program to Treasury
  • Subpart D — Miscellaneous Provisions (3 sections): addresses non-pledgeability (Retirement Savings Bonds carry the same non-transferability and non-pledgeability rules as standard savings bonds), tax treatment (interest is taxable as ordinary income in the year of redemption, consistent with Series EE and I bonds), and coordination with IRA contribution limits (contributions to a retirement savings account holding Treasury bonds count against the annual IRA contribution limit under 26 U.S.C. § 219)

  The regulatory architecture of Part 347 reflects Treasury's attempt to leverage the savings bond brand — a trusted, government-backed instrument with wide public recognition — to support retirement savings among workers who lack access to 401(k) and other employer-sponsored plans. The MyRA's failure to attract significant enrollment (only about 30,000 accounts opened before the 2018 wind-down) demonstrates the challenge of building new retirement savings vehicles without strong employer or workplace infrastructure behind them. The state auto-IRA programs that use Part 347's framework have shown more promise — OregonSaves and California's CalSavers have enrolled hundreds of thousands of workers using payroll deduction mechanisms that make participation automatic rather than voluntary. Recent rulemakings: amended at 82 FR 6246 (Jan. 2017) to implement the MyRA program details.

• 31 CFR Part 357 — Treasury/Reserve Automated Debt Entry System (TRADES) and Legacy TreasuryDirect (27 sections — the regulatory framework for Treasury securities held in the commercial book-entry system, which is how virtually all Treasuries held in brokerage accounts, mutual funds, ETFs, pension funds, and bank portfolios are legally structured). Part 357 governs the plumbing beneath every Treasury security that is not held directly at TreasuryDirect.gov:

  • § 357.0 — Book-entry systems: Treasury securities exist in three holding systems: (1) the commercial book-entry system (operated by the Federal Reserve Banks as fiscal agent; participants are Federal Reserve member banks, broker-dealers, and other financial institutions); (2) TreasuryDirect (retail accounts where individuals hold securities directly with Treasury); and (3) Legacy TreasuryDirect (a discontinued system, now closed to new accounts); Part 357 governs systems (1) and (3); Part 363 governs TreasuryDirect
  • § 357.10 — Governing law: the rights and obligations of the United States and Federal Reserve Banks with respect to book-entry securities are governed by the regulations in Part 357 (federal law), not by state commercial law; however, a participant's Security Entitlement (the interest of a broker-dealer's customer) is governed by the law of the securities intermediary's jurisdiction, typically under the Uniform Commercial Code Article 8 framework adopted by the relevant state
  • § 357.12 — Security Entitlements: a Federal Reserve Bank creates a Security Entitlement for a Participant (typically a large financial institution) by making a book entry indicating that a security has been credited to that Participant's account; the Participant in turn creates Security Entitlements for its customers (retail investors, mutual funds, pension funds); you do not "own" a Treasury bond in any traditional property sense — you hold a Security Entitlement against your broker, who holds a Security Entitlement against a Fed Bank, which holds the underlying security; in a broker insolvency, customers are protected by SIPC and the customer property rules of the Securities Investor Protection Act, not by direct ownership of the underlying Treasury
  • § 357.13 — Federal Reserve Banks as fiscal agent: each Federal Reserve Bank is authorized to: transfer book-entry securities on behalf of Participants; pledge or release pledges of securities; and perform other ministerial acts as fiscal agent of the United States; the Federal Reserve Banks do not guarantee Participant obligations — a Fed Bank that executes a transfer at a Participant's direction is not responsible if the Participant had no authority to make the transfer
  • § 357.15 — Creditor reach: a debtor's interest in a Security Entitlement can be reached by creditors only through legal process upon the Participant (the securities intermediary), not through any direct action against the Federal Reserve Banks or Treasury; this insulates the Treasury-Fed book-entry system from creditor attachment and ensures orderly transfer of securities
  • § 357.14 — Fed Bank authority: Federal Reserve Banks may charge fees for book-entry services, establish operating procedures, and prescribe forms; the Fed's Operating Circulars (particularly OC-7, Government Securities) supplement Part 357 with detailed operational procedures — clearing windows, cutoff times, fail procedures

  The TRADES system is the bedrock of U.S. Treasury market liquidity. The $26+ trillion Treasury market functions because virtually all Treasuries can be transferred electronically through TRADES in book-entry form — eliminating the need for physical certificates and enabling settlement within the T+1 timeframe. Part 357's legal framework — particularly the "governing law" provision and the Security Entitlement structure — resolves conflicts between federal law and state UCC rules in favor of federal law for the core Fed-Participant relationship, creating a predictable legal environment that supports the world's largest and most liquid government securities market.

The Treasury Securities Menu

Treasury bills (T-bills): Short-term instruments maturing in 4 weeks to 52 weeks. T-bills don't pay periodic interest — they're sold at a discount (below face value) and redeemed at face value. The difference is your return. A 26-week T-bill purchased for $980 that pays $1,000 at maturity yields approximately 4% annualized. T-bills are the most liquid short-term investment in the world.

Treasury notes (T-notes): Medium-term instruments with 2 to 10-year maturities. T-notes pay semiannual interest coupons and return principal at maturity. The 10-year T-note yield is the global benchmark interest rate — it influences mortgage rates, corporate borrowing costs, and asset valuations worldwide.

Treasury bonds (T-bonds): Long-term instruments with 20 or 30-year maturities. Same structure as T-notes. The 30-year bond (the "long bond") is the longest available conventional Treasury instrument.

TIPS (Treasury Inflation-Protected Securities): Available in 5, 10, and 30-year maturities. TIPS have a fixed stated interest rate, but the principal adjusts semiannually with the Consumer Price Index. When inflation is 4%, a $1,000 TIPS note becomes $1,040 in principal — and you earn interest on the higher balance. At maturity, you receive the greater of the original or adjusted principal. TIPS provide direct protection against inflation at the cost of lower base yields than nominal Treasuries.

Series I Savings Bonds: The retail inflation hedge. I bonds earn a composite rate combining a fixed rate (set when you buy) and a CPI-based variable rate that adjusts every six months. The variable rate can go to zero but not below. The $10,000 annual purchase limit per Social Security number (plus $5,000 additional if using federal tax refund) is a meaningful constraint. I bonds must be held at least 1 year; redeeming before 5 years forfeits 3 months of interest. They're non-marketable — you can't sell them, only redeem with Treasury.

Series EE Savings Bonds: EE bonds earn a fixed rate set at purchase and are guaranteed to double in 20 years (Treasury adds a one-time adjustment if the bond's actual earnings fall short of doubling). Same $10,000/year limit. Electronic EE bonds can be redeemed after 1 year; paper EE bonds (no longer sold through financial institutions) also redeem with Treasury.

How It Affects You

State Variations

Federal law (31 U.S.C. § 3124) explicitly prohibits state and local governments from taxing Treasury securities. This is not a state choice — it's federal preemption. All states must exempt Treasury interest from state income taxes.

Pending Legislation

No major structural changes pending as of 2026. The debt ceiling statute (31 U.S.C. § 3101) is periodically subject to legislative action — suspensions and increases have been routine congressional business for decades, with periodic crises when the ceiling is approached without congressional action.

Recent Developments

Interest rates on Treasury securities rose sharply in 2022-2023 as the Federal Reserve tightened monetary policy, making Treasuries significantly more attractive to individual investors than at any time since 2007. TreasuryDirect saw record new account openings as individual investors discovered they could earn 4-5% on T-bills with zero credit risk. I bonds saw extraordinary demand in 2021-2022 when CPI-based rates exceeded 9% annualized, with the $10,000 per-person limit creating waiting lists and social media discussion of bond-buying strategies.

• Moody's U.S. sovereign downgrade (May 2025): Moody's Investors Service downgraded U.S. long-term government debt from Aaa to Aa1 in May 2025 — citing the OBBBA's approximately $4 trillion in deficit increases and Congress's inability to demonstrate fiscal restraint. This made Moody's the last of the three major rating agencies to downgrade U.S. debt (S&P downgraded in 2011, Fitch in 2023). Treasury yields rose modestly on the downgrade news — 10-year yields reached approximately 4.7-4.9% — but the dollar remained strong and Treasury demand remained robust, reflecting that Treasuries remain the world's preeminent safe-haven asset regardless of rating. The rating action does not automatically trigger any portfolio reallocation mandates for institutional investors that reference Moody's ratings.
• OBBBA and debt ceiling — $4 trillion increase: The OBBBA raised the statutory debt ceiling by $4 trillion (from approximately $35 trillion to approximately $39 trillion) — the largest single debt ceiling increase in U.S. history. The increase was necessary to avoid a Treasury default during reconciliation; without it, the Treasury would have exhausted extraordinary measures in mid-2025. The debt ceiling increase was embedded in the OBBBA rather than passed as standalone legislation, meaning its political costs were absorbed in the reconciliation bill's total vote. Treasury Secretary Bessent pledged to use debt management tools (extending average maturity of issuance) to reduce rollover risk as the debt grows.
• Treasury yield curve and Fed policy (2025-2026): The Federal Reserve's rate cutting cycle — which began in September 2024 with a 50 basis point cut — paused in 2025 as inflation re-accelerated partly due to tariff pass-through. The fed funds target range is 3.50-4.75% as of the April 29, 2026 FOMC; 10-year Treasury yields are approximately 4.5-4.8%, reflecting a modestly positive term premium. The "higher for longer" interest rate environment has increased the federal government's net interest cost, which exceeded $1 trillion in FY2025 — making net interest the largest single federal expenditure category, exceeding both defense and Medicare. This structural interest cost constrains future fiscal flexibility.
• T-bill yields and money market competition: T-bill yields (4.2-4.6% on 4-week and 13-week bills in early 2026) remain competitive with high-yield savings accounts and money market funds, keeping individual investor demand for Treasuries strong. TreasuryDirect's 2022-2024 surge in retail investors (cumulative account growth to approximately 4 million accounts) created demand management challenges — the Treasury has improved the TreasuryDirect platform to handle higher transaction volumes and added non-competitive tender options for automatic reinvestment. Brokerage-held Treasuries through Fidelity, Schwab, and Vanguard remain the most accessible path for most retail investors who find TreasuryDirect's interface dated.