1. US Treasury Securities Backed by full faith and credit of the US government, hence free of credit risk Highly liquid instruments, $4T T-bills (Zero Coupon): 4 week, 13 week, 26 week. $985B T-Notes (Coupon): 2-y, 3-yr, 5-yr, 10-yr. $1,983B T-Bonds (Coupon): (20-yr) 30-yr. $564B TIPS (Coupon): 10-yr, (30-yr). $188B Source: Fabozzi, pp:231

2. US Treasury Securities (contd). Primary market: Sealed-bid, single price auctions announced several days in advance in a press release Bids made in multiples of $1000, submitted directly to the fed or financial institution by 1PM on auction day The lowest yield bids are accepted, he stop-out yield, the bid-to-cover ratio are announced Coupon rate: increments of 1/32. eg. 100-10 Good resource: Treasury DirectTreasury Direct Source: Fabozzi, pp:231

3. US Treasury Securities (contd). Secondary Market: multiple dealer, over the counter market (OTC), round the clock On the run: most recently issued, 70% trading activity Off the run: older issues, 24% When issued: announced for auction, but not yet issued, 6% Source: Fabozzi, pp:231

4. 10 yr note

5. Yield Analysis

6. Yield Curve