United States Treasury (UST)

United States Treasury (UST)

Key takeaways

• UST commonly refers to the U.S. Department of the Treasury and, informally, to debt issued by the United States.
• The Treasury manages federal finances, issues government debt, and oversees several bureaus (IRS, U.S. Mint, Bureau of the Fiscal Service, among others).
• U.S. Treasury securities are widely viewed as having negligible default risk and serve as the benchmark “risk-free” rate for pricing financial assets.
• Treasury securities come in marketable and non-marketable forms and include bills, notes, bonds, floating-rate notes, and savings bonds.

What the Treasury does

The U.S. Department of the Treasury manages the federal government’s revenue and cash flow. Its responsibilities include:
* Collecting taxes and administering revenue programs.
* Issuing and servicing federal debt to finance government operations.
* Overseeing agencies that mint currency, manage government accounts, and regulate certain financial activities.
* Working with the Federal Reserve and other agencies to inform and implement economic policy.

Organizations under the Treasury

Commonly listed Treasury components include:
* Internal Revenue Service (IRS)
* U.S. Mint
* Bureau of the Fiscal Service (manages public debt and payments)
* Office of the Comptroller of the Currency (OCC)
* Alcohol and Tobacco Tax and Trade Bureau (TTB)

Treasury securities — types and trading

The Treasury issues several types of securities to raise funds:
* Treasury bills (T‑bills) — short-term securities, typically issued at a discount and mature in one year or less.
* Treasury notes — medium-term securities (2–10 years).
* Treasury bonds — long-term securities (typically 20–30 years).
* Floating‑rate notes (FRNs) — interest adjusts with short-term reference rates.
* U.S. Savings Bonds — non-marketable government debt intended for individual investors.

Marketable securities (bills, notes, bonds, FRNs) trade in secondary markets. Non-marketable securities, like many savings bonds, cannot be sold in the open market and are registered to the owner.

Yields, the yield curve, and asset pricing

“UST yields” commonly refers to Treasury yields, and the “UST curve” refers to the Treasury yield curve. Because Treasury securities are assumed to have virtually no default risk, their yields are treated as the benchmark risk-free rate. Key implications:
* The Treasury yield sets the baseline for pricing other fixed-income instruments; riskier borrowers must offer higher yields.
* The yield curve (yields across maturities) is used to assess interest-rate expectations, economic outlook, and to price a wide range of assets.

Risk and return

Treasury securities offer high credit safety but typically lower yields than riskier investments. The trade-offs:
* Low default risk → low credit premium → lower expected income from interest.
* Riskier assets require higher expected returns to compensate for greater chance of loss or volatility.
* Investors and markets use Treasury yields as a reference when evaluating relative risk and expected return across asset classes.

Brief history

The Department of the Treasury was established in 1789. Alexander Hamilton was the first Secretary of the Treasury, sworn in on September 11, 1789. Since then, the Treasury has evolved into the federal department responsible for fiscal operations and debt issuance.

Bottom line

The U.S. Treasury is central to federal financial management and public finance. Its securities—because of their high credit standing—serve as the foundational benchmark for interest rates, asset pricing, and risk assessment across global financial markets.