With the opening of borders, many new concepts and terms have appeared in our country. One of these is Treasure - what is it?
In English, the word treasury means "treasury". Treasuries are US government debt confirmed by issuing securities. The main condition is that securities must be confirmed by the US government.
Kinds
Speaking about what it is - Treasury, it should be mentioned that these are not only bonds, but also bills, notes. The following types of government obligations are distinguished:
- Treasury bills (in English t-bill) , with a maturity of up to 12 months;
- Treasury Note ( Treasury Note ), circulation up to 10 years;
- Treasury bonds - the circulation period of such documents can reach 30 years.
In fact, the types of debt documents differ only in terms of circulation.
There are also securities with inflation protection or TIPS. Interest is accrued on such securities so that the risk of losing their value is minimized.
Key Holders
The purchase of government obligations of any country is a contribution to the development of its economy. And treasurers can be acquired by individuals, companies and entire states.
According to recent estimates, America's public debt reaches two tens of trillions of dollars. But this absolutely does not prevent bonds from being liquid; therefore, they are in demand on the international and domestic market.
Most of America's debt is held by the Federal Reserve Service and the country's largest holding companies. The remaining major buyers of bonds are the following states:
- Japan;
- China;
- Switzerland;
- Brazil;
- Belgium.
Russia is also a holder of bonds, but from the beginning of the conflict in eastern Ukraine, about 50% was sold, as a result, only $ 69.6 billion remained in Russia.
Securities Placement
We already know what it is - Treasury, let's find out the conditions for their acquisition. Initial sale of bonds is carried out at public auctions. But for a certain type of these papers special requirements are put forward.
For example, treasury bills are always sold at a discount to face value. The discount may be in the region of 1 thousand, and may reach 5 million. It is the discount that will act as the investor’s earnings, and its payment will be carried out at the time of repayment of the security.
Bonds and treasury notes provide for the payment of interest, usually every six months. The rate is usually fixed. However, investors have the opportunity to offer their price at interest, that is, the cost for which they are willing to invest their money in the country's economy. At the end of the circulation period, the nominal value of the security is returned to the investor.
Treasuries are also important for the secondary market. Securities of the US government are freely traded here, and the Treasury is often used as security for the broker's margin trading account. Securities can even be used as collateral for loans. Bonds also act as a benchmark in the issue of corporate securities.
The main feature of treasury bonds is that they are absolutely risk-free, according to rating agencies and investors themselves.
Tregeris: what is it and where to get it
The easiest way to purchase these securities - go to the website of the Ministry of Finance of America and go through a simple registration. In the Treasury Direct section, create an account, check your mail and confirm your account. After that, in your account you can choose the owner of the bond to purchase. Remember, if you purchase securities as a gift, then in the system the donor must also be registered.
Securities are offered for purchase by individuals at face value. The minimum purchase amount is $ 25. Money is withdrawn from the account during the day. This method of acquisition does not imply the issuance of a paper version of a treasury bond.
Paper bonds can only be obtained through a financial institution. The minimum cost of 1 bond is $ 50.
The second option is to buy at auction. Only “advanced” financial market players can do this. You can take part in the auction in person or automatically.
Bonds can also be purchased at brokerage companies.
The main thing is that to acquire treasuries you do not need to have US citizenship.
Profitability
What does treasury mean for a broker? This is not only a security, but also an indicator of global market sentiment.
If the yield of bonds rises, then their value on the exchange falls. This happens against the background of the fact that the redistribution of capital begins on the market. Therefore, as soon as the yield rises, brokers begin to buy American currency and bonds.
The best indicator of changes in the yield scale are 10-year bonds.
Latest trends
In the financial market, the word treasury literally coincides with the concept of 100% liquidity.
Today, the state is not buying them up a lot, but the number of individuals on the list of borrowers is only increasing. Over the past 2 years, private investors made purchases of more than 540 billion. Through mutual funds, insurance, pension and all kinds of markets, liabilities of 565 billion were acquired.
Nevertheless, the realities of the financial market (as of October 2017) are such that the yield on ten-year Treasuries has reached a record high of 2.37%. This figure will only slightly block inflation, and in fact the risks of the investor are not protected.