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I've never bought bonds before and I'm looking into US Treasuries. The 3mo treasury below is described as having a ~4.9% yield. How is this number derived?

To me, it looks like if I buy this note with a face value of $100, I have to pay $98.41716667. So, when it matures, I've earned $1.58283333, which is ~1.583%, correct?

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    Not a complete answer but the 1.6% is over the course of 3 months. The 4.9% is annualized.
    – 0xFEE1DEAD
    Mar 14, 2023 at 23:47
  • Ah, that makes sense. Thanks!
    – Max
    Mar 15, 2023 at 0:01
  • Here's a Fidelity calculator. It will give you a ballpark figure. It's useful when there is a coupon in addition to the premium or discount. Mar 15, 2023 at 0:31
  • see here for an example computation
    – AKdemy
    Mar 15, 2023 at 6:49

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The 1.6% is what you get over the course of 3 months. The 4.9% is annualized.

Here are the actual formulas, if you want to replicate the calculations yourself: https://www.treasurydirect.gov/instit/annceresult/press/preanre/2004/ofcalc6decbill.pdf

Daily Treasury Bill Rates

Please keep in mind that you're looking a T-bills, which are zero-coupon and have their own pricing conventions (ACT/360 instead of ACT/ACT):

The Bank Discount rate is the rate at which a bill is quoted in the secondary market and is based on the par value, amount of the discount and a 360-day year. The Coupon Equivalent, also called the Bond Equivalent, or the Investment Yield, is the bill's yield based on the purchase price, discount, and a 365- or 366-day year. The Coupon Equivalent can be used to compare the yield on a discount bill to the yield on a nominal coupon security that pays semiannual interest with the same maturity date.

source: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_bill_rates&field_tdr_date_value_month=202303

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  • Just realized I highlighted the 3/14 instead of the 3/13 but close enough...
    – 0xFEE1DEAD
    Mar 15, 2023 at 12:35

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