Treasury bills, commonly referred to as T-bills, are short-term securities issued by the U.S. government. They are essentially IOUs, with the government promising to pay back the face value of the bill upon its maturity. The yield on a Treasury bill represents the return an investor will receive by holding the bill until maturity. Yields move inversely to bond prices; when bond demand increases, prices rise, yields fall, and vice versa.
The yield curve, a graphical representation of yields across different maturities, is a crucial market indicator. A normal yield curve slopes upward, indicating higher yields for longer-term bonds compared to shorter-term ones. This reflects the additional risk investors take when lending money over an extended period.
Graph showing the U.S. Treasuries yield curve on Sep. 20, 2023 (Source: U.S. Treasury Yield Curve)
The Federal Reserve’s stance plays a pivotal role in influencing Treasury yields. Recent decisions and announcements from the Fed have in
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