If safe bets and I mean SAFE bets are your thing, this is the investment for you. No matter if the market and economy are up, down, or sideways, treasury securities have stood the test of time. This is because they are backed by the U.S government. 

There are 3 types, which were mentioned earlier... The T-Bills, T-Notes, and T-Bonds. Remember what sets them apart is the time difference. These treasuries pay interest semiannually and are built under most of the same rules as bonds.

       However, even this safe heaven has some risks. They are vulnerable to both inflation and changes in interest rates. The interest rates paid by the 3 types are typically the lowest of any bond or security because of how safe they are. But remember the longer the maturity date the higher the rate.

Who Buys Treasury Securities???

       Any type of investor can, and has, bought treasuries, including institutions, corporations, estates, and trusts. Big institutions purchase sell them to fund operations, but they are mostly used by investors like you and me because it is almost a guaranteed return and steady stream of income. 

There are also ways to combat against inflation with treasury inflation-protected securities. As inflation rises, so does the principal portion of the bond.

Other uses for Treasuries

       The treasury yield (TY) is the annual return investors can expect form holding U.S gov't securities until maturity. TYs can also show how investors assess the economy, as the higher the yields on long term U.S TY, the more confidence investors have in the economic outlooks (can also be a signal of rising inflation).

Treasury yields can go up, sending bond prices lower, if the Federal Reserve (FED) (1) increases its target for the federal funds rate (if it tightens monetary policy) (2), or even if investors merely come to expect the rate to go up. 

Example -

       A 10-year T-note with a face value of $1,000 is auctioned off at a yield of 3%, a subsequent drop in its market value to $974.80 will cause the yield to rise to 3.3%, since the Treasury will still be making the $30 ($1,000 x .03) annual coupon payments as well as the $1,000 principal repayment. Conversely, if the same T-note's market value were to rise to $1,026, the effective yield for a buyer at that price will have declined to 2.7%.

10-year treasury yield taken from www.MarketWatch.com

Look at years such as 2024 and 2008, when the TY goes higher there is a falling demand for Treasury bonds, meaning investors prefer more high risk investments. 

Interest rates on loans and bonds increase as TYs rise and overtime treasury securities shift to a higher demand because of the interest paid.