[quote=moneymaker]10 year T bills @ 3.57% today. As the 10 year goes higher, if the fed leaves rates low don’t they end up losing more money. Maybe the 2 year @ .235 is a better indicator however of how much money the government is losing. In that light it is a mere pittance I suppose. Once rates do go up nobody will hold the old T bills, they will cash them in to buy the new higher rate T bills.[/quote]
T-bills are US government obligations that pay off on a specific date at a specific amount (in denominations of $1,000), with due dates of less than 1 year. They don’t pay interest, they are issued, and bought and sold on the open market at a discount. They can’t be cashed in early.
Similarly, Treasury notes can’t be cashed in early. They’re obligations that are due between 1 and 10 years and pay interest. Once issued, they exist to maturity. Investors cannot cash them in at full value, and then buy a higher yielding note with the proceeds. They can only sell them on the open market at current rates.
