Glossary
Treasury bond
Long-term US government debt issued with a 20- or 30-year maturity, paying a fixed coupon every six months and highly sensitive to interest rates.
On this page
A Treasury bond (T-bond) is the longest debt the US government sells, issued with a maturity of 20 or 30 years. Like a Treasury note, it pays a fixed coupon twice a year and returns face value at maturity. The 30-year issue, nicknamed the "long bond," anchors the far end of the yield curve and is a favorite of pension funds and insurers matching long-dated obligations.
How it works
Credit risk is minimal; the US government is expected to pay. The real risk in a bond this long is interest-rate risk. With decades of fixed coupons ahead, a small change in market yields changes the present value of all those payments a lot, so long bonds can be as volatile as stocks in some years.
This is not hypothetical. When yields surged in 2022, long-dated Treasury funds lost about 30% or more in a single year, one of the worst years for long government bonds on record.
How investors use them
Long bonds tend to rise when investors flee stocks during a growth scare, which makes them a common diversifier, though that relationship broke down in 2022 when inflation pushed stocks and bonds down together. Their yields are often read as the market's view of long-run growth and inflation. Interest is federally taxable but exempt from state and local income taxes.