Different types of products are involved in the investment market, and US Treasury bonds (UST) are one of the most popular investment choices worldwide. This article will introduce the characteristics of UST, including the US bond market, US bond interest rates, UST yield calculation, and methods for trading UST.
US Treasury Bonds (referred to as "UST") are bonds issued by the US government. These bonds are issued by a stable government and are considered a low-risk investment tool with relatively reliable future yields.
US Treasury Bonds have different maturities, including short-term, medium-term, and long-term bonds. These bonds can be obtained through public bidding, auctions, or direct sales by the US Treasury Department. All repayments of US Treasury Bonds are guaranteed by the US government, making them one of the safest investments.
US Bond Market
The US bond market (also known as the public debt market) refers to all bond markets issued in the United States. This market is huge, with daily trading volumes reaching billions of dollars. The US bond market is divided into two main parts: the government bond market and the corporate bond market.
The government bond market is made up of bonds issued by the US government. These bonds include US Treasury bonds, US reserve notes, and US bonds. The trading volume of this market is quite large because these bonds are trusted by most investors.
The corporate bond market is made up of bonds issued by US companies. These bonds are usually riskier than government bonds, but there is also an opportunity to get higher returns. In this market, investors need to conduct careful analysis and evaluation to ensure that their investment risks are under control.
US Bond Interest
The interest on US bonds refers to the interest paid to bondholders by the government or companies. The interest on US Treasury bonds is usually lower than other types of bonds because they are considered one of the safest investments. In addition, as the maturity date of the bond is extended, the interest on the bond also increases.
It is very important for investors to understand the US bond market and US bond interest rates. This can help them make wise investment decisions and maximize returns. In addition, for investors who are interested in purchasing US Treasury bonds, understanding the US bond market can help them better understand bond characteristics and price fluctuations.
Futu is a company that provides global financial investment services, offering customers a variety of products including Hong Kong stocks, US stocks, US bonds, A-shares, and futures.
Futu offers US Treasury products with different maturities and interest rates. After holding the US Treasury to maturity, the funds will be reinvested in new bonds, maintaining stable interest income and a higher degree of capital security. (Download FUTUBULL now to invest in US bonds and increase your cash value)
As of August 23, 2023, the current yields to maturity for the US 10-year Treasury bond (US10Y), 5-year Treasury bond (US5Y), and 1-year Treasury bond (US12M) are:
US 10-year Treasury bond yield: 4.302%
US 5-year Treasury bond yield: 4.468%
US 1-year Treasury bond yield: 5.388%
Source: FUTUBULL-APP
The US Treasury yield refers to the profit that investors can earn when holding US Treasury bonds. The yield rate usually reflects the market's view on the US economy and fiscal situation, and is also affected by various factors such as inflation and interest rates.
The yield to maturity, also known as the redemption yield, is the internal rate of return earned by an investor who buys a bond and holds it until maturity, assuming that all coupon payments are reinvested at the same rate. It is the discount rate that makes the present value of the bond's future cash flows equal to its current market price. Therefore, the yield to maturity is the average annual return that an investor can expect to earn if the bond is purchased at the current market price and held until maturity, assuming that the reinvestment rate (market interest rate) remains constant. The yield to maturity is the total return anticipated on a bond if the bond is held until it matures and all interest payments are made.
Taking a bond with a value of 1000 yuan, an interest rate of 5%, and a maturity of three years as an example of buying.
Investors will receive 50 yuan in interest in the first year, 50 yuan in interest in the second year, and 50 yuan in interest upon maturity in the third year, plus the bond's principal value of 1000 yuan, for a total of 1150 yuan.
When issuing bonds, the issuer has agreed to pay the 1150 yuan, while investors will receive bond interest annually and redeem the face value of the bond at maturity.
However, the bond price is determined by the market due to factors such as credit rating and interest rates. Yield to maturity is used to measure the return on investment in bonds purchased at different prices.
Taking the bond mentioned above as an example, if it is purchased for 950 yuan, the yield to maturity is 6.9%, which is higher than the 5% when purchased for a bond value of 1000 yuan.
If it is purchased for 1100 yuan, the yield to maturity is only 1.6%.
1. If you want to trade US Treasury bonds, you can consider using Futu NiuNiu. As an online securities trading platform, Futu NiuNiu provides a simple, efficient, and secure securities trading experience. (Register Now)
2. Before purchasing US Treasury bonds, you need to open a securities account on Futu NiuNiu. (Open an Account Now)
3. You can filter the interested bond category by searching for "US Treasury bonds" and entering relevant trading information such as quantity and price. Finally, confirm the order and wait for the transaction to be executed. Click to learn more
Note:
Information from third-party sources displayed on Futu applications, websites, and event pages is for reference only and does not constitute any recommendation.
The above content is only the author's or third party's opinion and does not represent any position of Futu, nor does it constitute any investment advice related to Futu. Before making any investment decisions, investors should consider the risk factors related to investment products based on their own situations and seek professional investment advice when necessary. Futu strives but cannot confirm the truthfulness, accuracy, and originality of the above content, and Futu does not make any guarantees or promises in this regard. Use Futu to buy US bonds.
"FUTUBULL" is a one-stop financial investment trading platform, and securities services are provided by Futu Securities International (Hong Kong) Limited.