U.S. Treasury securities—such as bills, notes and bonds—are debt obligations of the U.S. government. When you buy a U.S. Treasury security, you are lending money to the federal government for a specified period of time.
Because these debt obligations are backed by the “full faith and credit” of the government, and thus by its ability to raise tax revenues and print currency, U.S. Treasury securities – or "Treasuries" – are generally considered the safest of all investments. They are viewed in the market as having virtually no “credit risk,” meaning that it is highly probable your interest and principal will be paid fully and on time.
Because of this unique degree of safety, interest rates are generally lower for this class of secruities than for other widely traded debt, riskier debt securities such as corporate bonds. When it comes to conservative investments, nothing says safety of principal like Treasury securities.
These instruments have stood for decades as a bastion of safety in the turbulence of the investment markets—the last line of defense against any possible loss of principal. The guarantees that stand behind these securities are indeed regarded as one of the key cornerstones of both the domestic and international economy, and they are attractive to both individual and institutional investors for many reasons.
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