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GOVERNMENT BONDS

 

U.S. GOVERNMENT ISSUES

There is no safer debt obligation than those issued by the US Government. US Treasury issues more debt than any other entity. Obligations are backed by the full faith and credit of the US Government. They are free of default risk, are non-callable and are tax exempt on state and local level. Treasuries can be purchased through brokerage firms (w/ commission) or through the Federal Reserve Banks free of charge.

The three primary marketable securities issued by the Treasury are:  Bonds, Notes and Bills.

Type Par Term Coupons Callable Taxable
Bill $10000 3-12 mos. No No Federal Only
Note $1000 2-10 yrs. Yes No Federal Only
Bond $1000 10-30 yrs. Yes No Federal Only

TREASURY BILLS: They are sold at a discount from face value and mature at face value. Federal Reserve Bank holds weekly auctions. Firms and individuals use T-Bills to park cash and defer income taxes into the next calendar year. Taxes are paid when bills mature.

TREASURY NOTES: They pay semi-annual coupons like corporate bonds.

TREASURY BONDS: They pay semi-annual coupons like corporate bonds. The 30-year Treasury bond is the flagship of the bond world. Many financial instruments and benchmarks are set off of the 30-year bond rate.
 

The following table is an excerpt from the Wall Street Journal on October 4, 2011.  Quotations are "a percent of the par value."  With the par values of bonds and notes listed in the above table.

On Treasury Bills, they are sold at a discount from the face value (face value is in the above table).  They pay no coupons.  For a Bill with an Bid discount percentage of 0.105 (this is the last one in the table listed below), we would figure the price like this:

    Start with 100% of the par value, subtract the Ask discount (0.105%) then multiply the result by pat ($10,000).  Thus:  100% - 0.105% = 99.895% x $10,000 = $9,989.50.  Done.

The point here is to calculate the price of a Bill.  To purchase the last bill on the table (below), it would cost $9989.50, it would mature on September 20, 2012 for par ($10,000), the investor would earn $10.50 in interest.

 

 
U.S. Treasury Quotes
TREASURY NOTES & BONDS
?
Tuesday, October 04, 2011
Treasury note and bond data are representative over-the-counter quotations as of 3pm Eastern time. For notes and bonds callable prior to maturity, yields are computed to the earliest call date for issues quoted above par and to the maturity date for issues below par.
Maturity Coupon Bid Asked Chg Asked
yield
10/31/2011 1.000 100.0313 100.1016 -0.0078 -0.415
10/31/2011 4.625 100.2969 100.3594 -0.0078 -0.431
11/15/2011 1.750 100.1641 100.2266 0.0000 -0.268
11/30/2011 0.750 100.0781 100.1406 0.0000 -0.159
11/30/2011 4.500 100.6563 100.7188 -0.0078 -0.184
12/15/2011 1.125 100.1797 100.2422 -0.0078 -0.116
12/31/2011 1.000 100.1953 100.2578 -0.0234 -0.084
12/31/2011 4.625 101.0469 101.1172 -0.0391 -0.093
1/15/2012 1.125 100.2656 100.3281 -0.0156 -0.053
1/31/2012 0.875 100.2266 100.2969 -0.0234 -0.046
1/31/2012 4.750 101.4844 101.5469 -0.0313 -0.068
2/15/2012 1.375 100.4453 100.5078 0.0078 -0.026
2/15/2012 4.875 101.7031 101.7813 -0.0156 -0.052
2/29/2012 0.875 100.2969 100.3594 0.0156 -0.011
2/29/2012 4.625 101.8203 101.8828 -0.0234 -0.033
3/15/2012 1.375 100.5469 100.6094 0.0078 0.009
3/31/2012 1.000 100.4375 100.4453 0.0313 0.087
3/31/2012 4.500 102.1094 102.1797 -0.0469 0.020
4/15/2012 1.375 100.6406 100.7109 -0.0078 0.029
4/30/2012 1.000 100.4688 100.5391 -0.0078 0.057
4/30/2012 4.500 102.4688 102.5391 -0.0547 0.051
5/15/2012 1.375 100.7109 100.7813 -0.0469 0.099
5/31/2012 0.750 100.4063 100.4141 0.0391 0.118
5/31/2012 4.750 103.0156 103.0313 0.0000 0.107
6/15/2012 1.875 101.1641 101.2344 -0.0078 0.097
6/30/2012 0.625 100.3125 100.3828 0.0078 0.107
6/30/2012 4.875 103.4453 103.5078 -0.0234 0.110
7/15/2012 1.500 101.0078 101.0703 -0.0078 0.123
7/31/2012 0.625 100.3047 100.3672 -0.0078 0.179
7/31/2012 4.625 103.6563 103.6641 0.0156 0.157
8/15/2012 1.750 101.3594 101.3750 0.0000 0.154
8/15/2012 4.375 103.5938 103.6719 0.0000 0.109
8/31/2012 0.375 100.1563 100.2188 -0.0313 0.134
8/31/2012 4.125 103.5703 103.6016 0.0078 0.138
9/15/2012 1.375 101.1328 101.1406 0.0000 0.168
9/30/2012 0.375 100.1641 100.2344 -0.0234 0.139
9/30/2012 4.250 104.0156 104.0469 -0.0078 0.144
10/15/2012 1.375 101.1875 101.2578 -0.0234 0.151
10/31/2012 0.375 100.1719 100.2422 0.0000 0.150
10/31/2012 3.875 103.9219 103.9844 -0.0078 0.150
11/15/2012 1.375 101.2891 101.3516 -0.0156 0.159
11/15/2012 4.000 104.2500 104.3281 -0.0313 0.102
11/30/2012 0.500 100.3281 100.3984 -0.0078 0.155
11/30/2012 3.375 103.6328 103.7031 -0.0234 0.160
12/15/2012 1.125 101.0703 101.1328 -0.0078 0.176
12/31/2012 0.625 100.4844 100.5547 -0.0156 0.177
12/31/2012 3.625 104.2422 104.3125 -0.0234 0.134
1/15/2013 1.375 101.4453 101.5156 -0.0156 0.187
1/31/2013 0.625 100.5000 100.5625 -0.0313 0.199
1/31/2013 2.875 103.4609 103.5313 -0.0469 0.197
2/15/2013 1.375 101.5156 101.5859 -0.0234 0.209
2/15/2013 3.875 104.9063 104.9844 -0.0313 0.207
2/28/2013 0.625 100.5234 100.5938 -0.0313 0.202
2/28/2013 2.750 103.4922 103.5547 -0.0234 0.214
3/15/2013 1.375 101.6094 101.6797 -0.0313 0.211
3/31/2013 0.750 100.7500 100.8203 -0.0313 0.198
3/31/2013 2.500 103.3281 103.3906 -0.0234 0.215
4/15/2013 1.750 102.2500 102.3203 -0.0234 0.228
4/30/2013 0.625 100.5781 100.6484 -0.0234 0.212
4/30/2013 3.125 104.5000 104.5703 -0.0234 0.210
5/15/2013 1.375 101.7656 101.8359 -0.0234 0.234
5/15/2013 3.625 105.3750 105.4531 -0.0313 0.233
5/31/2013 0.500 100.4063 100.4766 -0.0078 0.212
5/31/2013 3.500 105.3594 105.4219 -0.0156 0.213
6/15/2013 1.125 101.4219 101.4922 -0.0234 0.243
6/30/2013 0.375 100.2031 100.2734 -0.0156 0.218
6/30/2013 3.375 105.3984 105.4609 -0.0078 0.223
7/15/2013 1.000 101.2656 101.3359 -0.0078 0.247
7/31/2013 0.375 100.1953 100.2656 -0.0313 0.229
7/31/2013 3.375 105.6563 105.7266 -0.0156 0.222
8/15/2013 0.750 100.8828 100.9219 -0.0078 0.254
8/15/2013 4.250 107.3594 107.4063 -0.0156 0.259
8/31/2013 0.125 99.7578 99.7969 -0.0156 0.233
8/31/2013 3.125 105.4063 105.4375 0.0313 0.260
9/15/2013 0.750 100.9063 100.9375 -0.0078 0.267
9/30/2013 0.125 99.7500 99.7734 -0.0078 0.240
9/30/2013 3.125 105.6484 105.6797 -0.0156 0.257
10/15/2013 0.500 100.3984 100.4375 -0.0078 0.284
10/31/2013 2.750 105.0547 105.0859 -0.0156 0.285
11/15/2013 0.500 100.3750 100.4141 -0.0313 0.304
11/15/2013 4.250 108.2656 108.3125 -0.0313 0.298
11/30/2013 2.000 103.6094 103.6406 -0.0156 0.303
12/15/2013 0.750 100.9453 100.9766 -0.0234 0.304
12/31/2013 1.500 102.6406 102.6797 -0.0391 0.297
1/15/2014 1.000 101.4844 101.5234 -0.0703 0.328
1/31/2014 1.750 103.2500 103.2813 -0.0547 0.330
2/15/2014 1.250 102.1250 102.1563 -0.0469 0.333
2/15/2014 4.000 108.6094 108.6563 -0.0469 0.317
2/28/2014 1.875 103.6250 103.6641 -0.0625 0.344
3/15/2014 1.250 102.1641 102.2031 -0.0703 0.345
3/31/2014 1.750 103.4297 103.4688 -0.0938 0.348
4/15/2014 1.250 102.2266 102.2578 -0.0547 0.352
4/30/2014 1.875 103.7813 103.8125 -0.1484 0.384
5/15/2014 1.000 101.6016 101.6328 -0.0547 0.372
5/15/2014 4.750 111.3594 111.4063 -0.0625 0.358
5/31/2014 2.250 104.9297 105.0000 -0.0938 0.355
6/15/2014 0.750 101.0078 101.0469 -0.0703 0.360
6/30/2014 2.625 106.0781 106.1172 -0.0781 0.376
7/15/2014 0.625 100.6563 100.6953 -0.0547 0.374
7/31/2014 2.625 106.2344 106.2734 -0.0703 0.387
8/15/2014 0.500 100.3047 100.3438 -0.0547 0.380
8/15/2014 4.250 110.9844 111.0313 -0.0625 0.371
8/31/2014 2.375 105.6641 105.7031 -0.0703 0.398
9/15/2014 0.250 99.5625 99.5938 -0.0547 0.389
9/30/2014 2.375 105.8125 105.8516 -0.0625 0.402
10/31/2014 2.375 105.9219 105.9609 -0.0469 0.419
11/15/2014 4.250 111.7344 111.7813 -0.0625 0.434
11/30/2014 2.125 105.2188 105.2578 -0.0625 0.444
12/31/2014 2.625 106.8906 106.9375 -0.0859 0.463
1/31/2015 2.250 105.8281 105.8672 -0.0234 0.468
2/15/2015 4.000 111.5469 111.5938 -0.1719 0.516
2/15/2015 11.250 135.9063 135.9531 -0.1563 0.459
2/28/2015 2.375 106.2969 106.3516 -0.0703 0.491
3/31/2015 2.500 106.8750 106.9063 -0.0391 0.500
4/30/2015 2.500 106.9453 106.9844 -0.0625 0.523
5/15/2015 4.125 112.8125 112.8594 -0.1406 0.526
5/31/2015 2.125 105.7188 105.7578 -0.0391 0.532
6/30/2015 1.875 104.8125 104.8516 -0.0469 0.561
7/31/2015 1.750 104.4844 104.5234 0.0391 0.552
8/15/2015 4.250 113.8906 113.9375 -0.1406 0.594
8/15/2015 10.625 138.4531 138.4844 0.0000 0.540
8/31/2015 1.250 102.5313 102.5703 -0.1172 0.583
9/30/2015 1.250 102.4609 102.5000 -0.0547 0.614
10/31/2015 1.250 102.3828 102.4219 -0.1094 0.646
11/15/2015 4.500 115.6563 115.6875 -0.0469 0.629
11/15/2015 9.875 137.6563 137.6875 -0.0469 0.584
11/30/2015 1.375 102.8359 102.8750 -0.0703 0.672
12/31/2015 2.125 105.9844 106.0313 -0.1250 0.678
1/31/2016 2.000 105.4141 105.4453 -0.1250 0.718
2/15/2016 4.500 116.1406 116.1719 -0.1719 0.726
2/15/2016 9.250 136.7031 136.7344 -0.1875 0.686
2/29/2016 2.125 105.9922 106.0234 -0.1328 0.733
2/29/2016 2.625 108.1094 108.1719 -0.1406 0.736
3/31/2016 2.250 106.5859 106.6172 -0.1406 0.748
3/31/2016 2.375 107.0469 107.0938 -0.1719 0.764
4/30/2016 2.000 105.4609 105.4922 -0.1250 0.775
4/30/2016 2.625 108.2031 108.2656 -0.1563 0.781
5/15/2016 5.125 119.6719 119.7188 -0.0938 0.765
5/15/2016 7.250 129.4375 129.4688 -0.0938 0.738
5/31/2016 1.750 104.2813 104.3203 -0.1172 0.802
5/31/2016 3.250 111.2344 111.3125 -0.1406 0.770
6/30/2016 1.500 103.0781 103.1172 -0.1094 0.828
6/30/2016 3.250 111.2188 111.2656 -0.1719 0.820
7/31/2016 1.500 103.0391 103.0781 -0.0781 0.847
7/31/2016 3.250 111.4063 111.4531 -0.0938 0.822
8/15/2016 4.875 119.3438 119.3906 0.0625 0.800
8/31/2016 1.000 100.6016 100.6406 -0.0781 0.867
8/31/2016 3.000 110.2031 110.2500 -0.0625 0.861
9/30/2016 1.000 100.5156 100.5625 -0.0625 0.885
9/30/2016 3.000 110.2656 110.2969 -0.0781 0.885
10/31/2016 3.125 110.9375 111.0000 -0.0625 0.901
11/15/2016 4.625 118.5000 118.5469 -0.0938 0.904
11/15/2016 7.500 133.0156 133.0469 -0.0781 0.875
11/30/2016 2.750 109.1406 109.1875 -0.0938 0.920
12/31/2016 3.250 111.7344 111.7813 -0.1250 0.939
1/31/2017 3.125 111.1875 111.2344 -0.0781 0.954
2/15/2017 4.625 119.0938 119.1719 -0.0938 0.949
2/28/2017 3.000 110.5938 110.6719 -0.0781 0.968
3/31/2017 3.250 111.9531 112.0313 -0.1250 0.991
4/30/2017 3.125 111.3906 111.4688 -0.1250 1.003
5/15/2017 4.500 119.0469 119.0938 -0.0938 0.993
5/15/2017 8.750 142.3906 142.4375 -0.0313 0.963
5/31/2017 2.750 109.4375 109.4688 -0.0781 1.022
6/30/2017 2.500 108.0000 108.0313 -0.0938 1.053
7/31/2017 2.375 107.2969 107.3281 -0.0625 1.073
8/15/2017 4.750 120.9375 120.9688 -0.1094 1.052
8/15/2017 8.875 144.5625 144.6094 -0.1875 1.016
8/31/2017 1.875 104.3750 104.4219 -0.0625 1.099
9/30/2017 1.875 104.3438 104.3906 -0.0156 1.115
10/31/2017 1.875 104.2344 104.2656 -0.1250 1.146
11/15/2017 4.250 118.5156 118.5625 -0.0469 1.101
11/30/2017 2.250 106.5000 106.5469 -0.0313 1.145
12/31/2017 2.750 109.5938 109.6250 0.0000 1.146
1/31/2018 2.625 108.7969 108.8438 -0.0313 1.169
2/15/2018 3.500 114.2188 114.2656 0.0000 1.167
2/28/2018 2.750 109.5781 109.6094 -0.0156 1.187
3/31/2018 2.875 110.3594 110.4063 -0.0469 1.202
4/30/2018 2.625 108.7813 108.8281 0.0156 1.223
5/15/2018 3.875 116.8438 116.8750 0.0313 1.211
5/15/2018 9.125 150.6250 150.6563 -0.0469 1.147
5/31/2018 2.375 107.0938 107.1250 -0.0156 1.255
6/30/2018 2.375 107.0469 107.1094 -0.0313 1.270
7/31/2018 2.250 106.1563 106.2031 -0.0313 1.297
8/15/2018 4.000 117.9219 117.9688 -0.0313 1.258
8/31/2018 1.500 101.1719 101.2188 -0.0313 1.315
9/30/2018 1.375 100.2031 100.2500 -0.0156 1.337
11/15/2018 3.750 116.4375 116.4688 -0.0156 1.316
11/15/2018 9.000 152.6563 152.7031 -0.0156 1.235
2/15/2019 2.750 109.4844 109.5156 0.0469 1.386
2/15/2019 8.875 153.1719 153.2031 0.0625 1.279
5/15/2019 3.125 112.2969 112.3594 -0.0313 1.407
8/15/2019 3.625 116.1094 116.1406 -0.0156 1.445
8/15/2019 8.125 150.0469 150.0938 -0.1406 1.379
11/15/2019 3.375 114.4688 114.5156 0.0156 1.470
2/15/2020 3.625 116.5469 116.5781 -0.0156 1.507
2/15/2020 8.500 155.2656 155.3125 -0.2344 1.451
5/15/2020 3.500 115.6563 115.6875 -0.1094 1.547
5/15/2020 8.750 158.1875 158.2188 0.0000 1.513
8/15/2020 2.625 108.2500 108.2969 0.0156 1.616
8/15/2020 8.750 159.3125 159.3594 0.0156 1.553
11/15/2020 2.625 108.1250 108.1563 -0.0781 1.657
2/15/2021 3.625 116.7813 116.8281 0.0156 1.675
2/15/2021 7.875 154.1563 154.1875 0.0469 1.615
5/15/2021 3.125 112.2813 112.3281 0.0469 1.727
5/15/2021 8.125 157.2188 157.2656 -0.0156 1.655
8/15/2021 2.125 103.0469 103.1094 0.0156 1.780
8/15/2021 8.125 158.1406 158.1875 0.0469 1.693
11/15/2021 8.000 157.9219 157.9688 0.0313 1.727
8/15/2022 7.250 152.8594 152.9063 0.0313 1.850
11/15/2022 7.625 157.3594 157.4063 0.0313 1.877
2/15/2023 7.125 152.7031 152.7500 0.0156 1.931
8/15/2023 6.250 144.4688 144.5156 0.0313 2.012
11/15/2024 7.500 161.4375 161.4844 0.1563 2.108
2/15/2025 7.625 163.6250 163.6719 0.1875 2.126
8/15/2025 6.875 155.8750 155.9219 0.2188 2.179
2/15/2026 6.000 145.9063 145.9375 0.2813 2.241
8/15/2026 6.750 156.4375 156.4844 0.2500 2.255
11/15/2026 6.500 153.7188 153.7500 0.2500 2.276
2/15/2027 6.625 155.9063 155.9531 0.2500 2.285
8/15/2027 6.375 153.5469 153.5781 0.2656 2.318
11/15/2027 6.125 150.4688 150.5000 0.2656 2.343
8/15/2028 5.500 142.8906 142.9375 0.2969 2.391
11/15/2028 5.250 139.4063 139.4375 0.2656 2.421
2/15/2029 5.250 139.7656 139.8125 0.2344 2.426
8/15/2029 6.125 153.3594 153.4063 0.2188 2.423
5/15/2030 6.250 156.5781 156.6250 0.1875 2.445
2/15/2031 5.375 144.1875 144.2188 0.1719 2.484
2/15/2036 4.500 133.0625 133.1094 0.2188 2.647
2/15/2037 4.750 138.0469 138.0781 0.1719 2.673
5/15/2037 5.000 143.1094 143.1563 0.1875 2.664
2/15/2038 4.375 131.2344 131.2813 0.1406 2.707
5/15/2038 4.500 133.8750 133.9063 0.2969 2.704
2/15/2039 3.500 114.5000 114.5781 0.1875 2.739
5/15/2039 4.250 129.4688 129.5000 0.2031 2.723
8/15/2039 4.500 134.5000 134.5469 0.0938 2.723
11/15/2039 4.375 132.1406 132.1719 0.0781 2.729
2/15/2040 4.625 137.3438 137.3906 0.0625 2.724
5/15/2040 4.375 132.4375 132.5156 0.1250 2.730
8/15/2040 3.875 122.3125 122.3594 0.0781 2.748
11/15/2040 4.250 130.0938 130.1406 0.0625 2.740
2/15/2041 4.750 140.5469 140.5938 0.0156 2.731
5/15/2041 4.375 132.9531 133.0000 0.0469 2.741
8/15/2041 3.750 120.0313 120.1094 0.0938 2.757
Source: ICAP plc; historical data prior to 6/9/11: Thomsom Reuters
 
TREASURY BILLS
Tuesday, October 04, 2011
Treasury bill bid and ask data are representative over-the-counter quotations as of 3pm Eastern time quoted as a discount to face value. Treasury bill yields are to maturity and based on the asked quote.
Maturity Bid Asked Chg Asked
yield
10/6/2011 0.015 -0.005 0.0000 0.0000
10/13/2011 0.015 -0.005 0.0000 0.0000
10/20/2011 0.030 0.010 0.0050 0.0100
10/27/2011 0.015 -0.015 -0.0100 0.0000
11/3/2011 0.015 -0.005 0.0050 0.0000
11/10/2011 0.025 0.005 0.0150 0.0050
11/17/2011 0.015 -0.005 0.0050 0.0000
11/25/2011 0.025 0.005 0.0100 0.0050
12/1/2011 0.035 0.010 0.0200 0.0100
12/8/2011 0.035 0.015 0.0250 0.0150
12/15/2011 0.055 0.035 0.0450 0.0350
12/22/2011 0.070 0.050 0.0600 0.0510
12/29/2011 0.080 0.060 0.0650 0.0610
1/5/2012 0.015 0.005 0.0050 0.0050
1/12/2012 0.010 -0.010 -0.0200 0.0000
1/19/2012 0.015 -0.005 0.0000 0.0000
1/26/2012 0.040 0.020 0.0150 0.0200
2/2/2012 0.035 0.010 0.0100 0.0100
2/9/2012 0.025 0.005 -0.0050 0.0050
2/16/2012 0.025 0.005 -0.0050 0.0050
2/23/2012 0.025 0.005 -0.0050 0.0050
3/1/2012 0.025 0.020 -0.0150 0.0200
3/8/2012 0.025 0.020 -0.0150 0.0200
3/15/2012 0.035 0.010 -0.0050 0.0100
3/22/2012 0.030 0.020 -0.0100 0.0200
3/29/2012 0.035 0.025 -0.0150 0.0250
4/5/2012 0.040 0.035 -0.0100 0.0350
5/3/2012 0.050 0.040 -0.0150 0.0410
5/31/2012 0.065 0.045 -0.0050 0.0460
6/28/2012 0.070 0.060 -0.0050 0.0610
7/26/2012 0.085 0.070 0.0000 0.0710
8/23/2012 0.090 0.085 -0.0150 0.0860
9/20/2012 0.105 0.080 0.0050 0.0810
Source: ICAP plc; historical data prior to 6/9/11: Thomsom Reuters
 
 
 

 

MUNICIPAL BONDS

Municipal Bonds: Sold by municipalities (States, Cities, Local Communities) for their financing efforts. (Sold through brokers and dealers. Governments are not in the securities business, they do not sell the bonds themselves.) Bond funds are used to pave streets, build bridges etc.

Revenue bonds are backed by the taxing/earning power of the project. If bond funds were used to build the new Mississippi River bridge, tolls from the bridge would pay coupons and retire the bonds.

General Obligation bonds are not backed by a specific project but by the taxing power of the municipality to raise the money to pay principal and coupon interest.

The most attractive feature of Muni's is their tax exempt status. They are exempt from federal income tax and are exempt from state taxes if you buy them from the state in which you live.

Tax Equivalent Yield = (Interest Rate of Municipal Bond)/ (1-Tax Rate).  This calculation is used to compare a tax exempt bond to a taxable bond.  It creates and "apples-to-apples" comparison for investment purposes