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3. Current US Treasury rates are easily found .....(edited)

Last edited Mon Sep 24, 2012, 09:44 PM - Edit history (7)

At http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

The coupon On recent issue 30 year paper is only 2.75%

Just for clarity's sake, here's how to read and understand that page;



The column furthest to the left indicates the type of security, specifically its issue length.

The column "Coupon" indicates the Annual PAID rate of interest as a percent of a $1000.00 par bond. In other words, the 30 year pays $27.50 per year in interest payments, split evenly in two installments paid 6 months apart. Those that have "0.00" in that column are known as "Zero Coupon" bonds, but in Treasury parlance they are;

"Bills" - Maturities of 1 year or less
"Notes" - Maturities of 10 years or less
"Bonds" - Maturities of more than ten years.
Technically, all these securities are Bonds.

The Coupon is the column next to the maturity with a digit, a decimal and then 3 digits. You can see the 3 month, 6 month and 12 month are all Zeros.

The column "Maturity" indicates the date when the bond they are quoting will mature. On the date of maturity, the US Treasury gives you $1000.00 for each one held, regardless of what you paid for it. This is called the "Par Value". The overwhelming majority of bonds issued in the US, be they Government, Corporate or Municipal have this same Par.

The column "Price/Yield" indicates how much the bond will cost and how much the yield will be to maturity on an annual basis. It is also important to know that the price figure is quoted in two different ways. With the Bill, the price is actually the amount below Par calculated as a percent of Par. For the 12 month, it says "0.17" point one seven of a percent of $1000 equals $1.70 making the price of the bond $998.30. Hold it for a year and the Treasury gives you Par for it. Your interest is just that - $1.70. The 3 month and the 6 month are again, figured on an annual basis, but in order to realize your $1.10 on the 3 month, you have to buy one, hold it to maturity, buy another at the same rate, hold till maturity and repeat twice more. This doesn't always happen, as the yield changes all the time, but that is how they are figured.

Notice that the 2 year through the 30 year do NOT have a decimal point, but a dash (-) between the first two digits and the second two. That is because these bonds are quoted as a percentage of Par with the digits to the right of the dash in 32nds of a percent. A thirty second of a percentage point equals 0.03125. So look at the 2 year. It is quoted at 99-31 & 1/2 This is obviously just 1/2 of a 32nd below Par, which translates to $999.84375 cost per bond. Now, I know (or am 90% sure! LOL) that my math here is correct. The 2 year pays a coupon of .25% or $2.50 per bond per year. To figure yield, one must figure the annual income. Since you will gain just under $.16 in value over two years, your annual gain is going to be $2.50 plus about eight cents. 2.58/1000 = .00258 or a yield of .26%

The next column over says "Price/Yield change". This is telling you how much, again, in 32nds of a percent, the bond changed in price and the change in yield - green for an increase, red for a decrease.

Lastly the time, which is the time of day Bloomberg is relating the quote from.


Hope that helps a little, though I realize it in NO way answers the OP's question. I'm still thinking about that one!