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I am looking at Bills tab on the site:

http://www.treasurydirect.gov/instit/annceresult/annceresult.htm

There is a 4-week security term with what appears to be a 4-week maturity date, with "high-rate" as high as 0.035%.

What does that mean? If I buy bills for say 10 000 USD, does that mean that the value will increase by 0.035% per 4 weeks?

That would mean 1.0035^(52/4) = 1.04646 => 4.6 % increase per year.

Is this correct way to calculate the value after a year, or 4 weeks?

What is strange though is that the 13, 26 and 52 weeks are pretty much on the same level. How come?

What am I missing/not understanding?

2 Answers 2

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One detail you seem to be confused on is the way the amount works.

The $10,000 USD is the nominal amount - the amount payable to you on maturity. The "rate" or "yield" (what normal people might think of as "interest") is a function of the price, which fluctuates (but, obviously, is set at the time you purchase it).

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  • Could you give me an example? I have 10 000 USD that I would like to invest. What can I expect on return after 4 weeks? Is it possible to continuesly reinvest these in 4-weeks bills? How would I have after 1 year?
    – mjs
    Jul 2, 2014 at 10:12
  • There is no reasonably normal situation where an individual would want/need to invest in 4-week US Treasuries. What is your goal here? Jul 2, 2014 at 10:25
  • I am just trying to understand what the High Rate column is for, and what to expect when buying different bills..
    – mjs
    Jul 2, 2014 at 11:31
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No, that is an annualized interest rate. Treasuries pay little, and short term Treasuries pay nearly nothing.

Here's the historical 4 week Treasury:

enter image description here

So, the interest rates across maturities are not equal unless if the yield curve is flat, right before a recession.

As an aside, short term Treasuries are rarely a good investment:

enter image description here

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