Treasuries set the standard for safety in dollar investing, and on one measure, the chance of not being repaid, they earn it. On every other measure they behave like ordinary bonds. The US government backs each bill, note and bond with its full faith and credit, which is a promise about dollar payments on set dates. It says nothing about what those dollars will buy, what the security fetches if you sell early or what rate is on offer when it matures. This page sorts each risk into removed or kept, with the agencies' current ratings, the state of the debt limit and a dated example for every risk that remains. If the securities themselves are new to you, the US Treasuries hub explains bills, notes and bonds first.
What does risk free mean for a Treasury?
For a Treasury, risk free describes default risk only: the US government promises to pay interest and principal in dollars on schedule, backed by its full faith and credit. TreasuryDirect states that all marketable Treasury securities carry that backing, and nothing in the promise refers to market prices, inflation or future rates.
The promise is strong because of who makes it. The United States borrows in the currency it issues, taxes the largest economy in the world and has the deepest bond market behind it, so running short of dollars is not the constraint it is for a company or a city. When analysts call a Treasury yield the risk-free rate, they mean a benchmark with no default premium built in, which is why the 3-month bill appears in valuation formulas. How that benchmark is chosen and used is covered in what is the risk-free rate? The label describes a rate, not the experience of owning the security.
Investor.gov lists five risks that bonds carry: credit, interest rate, inflation, liquidity and call risk. Treasury's auction records list every note and bond sold since 2016 as not callable, and the credit risk is about as small as credit risk gets. That leaves three of the five in place, plus the reinvestment risk that matters most to bill buyers. Types of investment risk defines each one in general terms; the rest of this page measures them for Treasuries specifically.
Which risks do Treasuries remove, and which do they keep?
They come close to removing default risk and remove call risk entirely, but they keep inflation, interest-rate, reinvestment and liquidity risk in amounts that depend on maturity. The table puts a short bill, a 10-year note and a 30-year bond side by side; the price figures are for a sudden one-point rise in yields on securities bought at par at the October 30, 2026 yields.
| Risk | Removed? | 13-week bill | 10-year note | 30-year bond | What limits it |
|---|---|---|---|---|---|
| Default | Nearly | Full faith and credit | Same | Same | Already minimal |
| Call (early repayment by the issuer) | Yes | Not callable | Not callable | Not callable | Nothing needed |
| Inflation | No | Small: the rate resets every 13 weeks | Large: the coupon is fixed for 10 years | Largest: fixed for 30 years | TIPS, I bonds, shorter maturities |
| Interest rate (market price) | Only if held to maturity | About -0.25% | About -7.5% | About -13.4% | Matching maturity to when you need the money |
| Reinvestment | No | High: rolls over four times a year | Lower: only the coupons need reinvesting | Lowest | Longer maturities, a ladder |
| Liquidity before maturity | Mostly | Matures within weeks | Sale through a broker at the bid price | Sale through a broker; older issues trade less | A brokerage account, staggered maturities |
| Debt-limit timing | No | Bills maturing near a projected shortfall can cheapen | Little effect so far | Little effect so far | Avoiding bills that mature near that date |
Read across a row and maturity decides how much of each risk you hold. A bill swaps price risk for reinvestment risk; a long bond does the reverse. Inflation hurts both, the long bond far more because its payments are fixed for longer. The price column comes from the standard bond formula, worked through in why bond prices fall when rates rise.
What are the US government's credit ratings?
S&P Global and Fitch rate the United States AA+ and Moody's rates it Aa1, one step below each agency's top grade, all with stable outlooks. Each agency reached that grade by downgrading from its top rating once, and none has moved since.
| Agency | Rating and outlook | Most recent action | Lost its top rating | 10-year yield on the day of the cut | Next trading day |
|---|---|---|---|---|---|
| S&P Global Ratings | AA+, stable | Affirmed June 26, 2026 | August 5, 2011 | 2.58% | 2.40% |
| Fitch Ratings | AA+, stable | Affirmed August 13, 2026 | August 1, 2023 | 4.05% | 4.08% |
| Moody's Ratings | Aa1, stable | Downgraded May 16, 2025 | May 16, 2025 | 4.43% | 4.46% |
The reasons differed. S&P judged in 2011 that the Budget Control Act passed that summer fell short of what was needed to stabilize the government's finances, and that the capacity of Congress and the Administration to deal with the debt had become less stable, effective and predictable. Fitch cited expected fiscal deterioration, a growing debt burden and an erosion of governance shown by repeated debt-limit standoffs. Moody's pointed to a rise over more than a decade in government debt and interest costs to levels well above those of similarly rated countries. In its June 2026 affirmation, S&P said it expects net general government debt to approach 100% of GDP.
None of the three cuts set off a run from Treasuries. The 2011 case is the clearest: the 10-year yield fell 0.18 point on the next trading day, investors kept buying the asset that had just been downgraded, and CRS found no flight from Treasuries in the first trading sessions afterwards. The federal banking agencies said on the day of the downgrade that the risk weights for Treasuries in bank capital rules would not change.
A rating is an opinion about the chance of default, not a term of the contract. A downgrade changes no coupon, no maturity date and no amount owed. Where ratings could matter is in the long run, through the extra yield investors demand to hold US debt, a force covered in what moves Treasury yields.
Could the debt ceiling cause a missed payment?
In principle yes, because Treasury cannot borrow beyond the limit; in practice, in every modern standoff Congress raised or suspended it before any payment was missed. The limit now stands at $41.1 trillion (Congressional Research Service, as of Nov 1, 2026). The Daily Treasury Statement put debt subject to the limit at about $40.39 trillion on October 29, 2026, leaving roughly $713 billion of room, and S&P's June 2026 report expects the limit to become binding in 2027. S&P also notes that Congress has raised or suspended it almost 80 times since 1960.
When debt reaches the limit, Treasury starts using extraordinary measures, temporary steps such as suspending investment of federal employees' contributions to the Thrift Savings Plan's G Fund, which keep payments going for a time. The projected date when cash and those measures would run out is called the X-date, and market strain concentrates there, because securities maturing just after it would be the first payments at risk.
Worked example: The 2023 standoff in the bill market
- On May 26, 2023, during that spring's debt-limit standoff, the 1-month par yield reached 6.02%.
- The same day the 3-month yield was 5.34%, so the shorter bill paid 0.68 point more, the opposite of the usual order at the time.
- After negotiators reached a deal to suspend the limit over the following weekend, the 1-month yield fell to 5.31% on May 30, while the 3-month rose to 5.55%.
- Holders of the affected bills were paid on time. The cost showed up as higher yields on new bills and lower prices for anyone selling bills maturing near the date.
Standoffs cost taxpayers money even when they end well. In a March 2026 report, GAO estimated that Treasury securities issued during the most acute stretches of the 2011 to 2023 impasses cost roughly $107 million to $161 million in extra interest, in 2024 dollars. Further back, CRS describes three episodes in which payments did fall short: some interest went unpaid in 1814, during the War of 1812; gold clauses in federal bonds were cancelled in 1933 and 1934, so holders received less than they had expected; and in late April and early May 1979, about 4,000 checks to individual investors, worth an estimated $122 million, went out late because of back-office problems. Holders paid through the Federal Reserve's book-entry system were not affected in 1979.
For a saver, the practical point is narrow. A Treasury maturing near a projected X-date carries some timing risk, which a bill a few weeks shorter or longer avoids. The rest of the market has, so far, treated each standoff as a political problem rather than a credit event.
How much can inflation take from a Treasury?
As much as inflation outruns the yield: a Treasury pays fixed dollars, so whenever prices rise faster than its after-tax yield, its real value shrinks. Inflation is the risk the government's backing does nothing about, and the 2022 surge shows the size of it.
Worked example: A 52-week bill through the 2022 inflation surge
- At the December 28, 2021 auction, $10,000 of face value in the 52-week bill cost $9,960.57, an investment rate of 0.397%.
- The bill paid $10,000 on December 29, 2022, or $39.43 of interest.
- Over the same year, the CPI-U rose from 278.802 in December 2021 to 296.797 in December 2022, an increase of 6.45%.
- In December 2021 dollars, the $10,000 repaid was worth about $9,394.
- Against the $9,960.57 invested, that is a loss of about $567 of purchasing power, or 5.7%, before federal tax on the $39.43.
A bill exposes you to inflation for weeks at a time and then reprices, so a run of high inflation is followed, with a lag, by higher bill yields. Longer Treasuries lock the exposure in for years. A 10-year note bought at the October 30, 2026 par yield of 4.94% keeps about 3.75% after a 24% federal tax rate, so it stays ahead of prices only while inflation averages less than that; the CPI rose 3.74% in the 12 months to September 2026. TIPS add CPI changes to their principal and I bonds' rates follow it, which is why they are the usual hedges: see TIPS explained and I bonds explained. The after-tax arithmetic across savings products is in real returns and inflation.
Can you lose money on a Treasury if rates rise?
Only if you sell early or own a fund: rising yields cut the market price of existing Treasuries, but each still repays face value at maturity. The size of the drop grows with the time left to maturity, which is why 2022 was so painful for longer notes.
Worked example: A 10-year note bought at par in January 2022
- On January 3, 2022, the 10-year par yield was 1.63%, so a new 10-year note bought at par would pay $163 a year per $10,000.
- By December 30, 2022, that note had nine years left. The 7-year par yield was 3.96% and the 10-year 3.88%, so a 9-year Treasury yielded about 3.91%.
- At 3.91%, a 9-year note with a 1.63% coupon is worth about 82.86 per 100, or $8,286 per $10,000.
- With $163 of coupons, a sale on December 30, 2022 would have returned about -15.5% for the year.
- Held to its 2032 maturity instead, the note still repays $10,000; the cost is the years spent earning 1.63% while new notes paid more.
That last line is the trade-off. Holding to maturity removes the loss of principal but not the opportunity cost of a low coupon. A fund that holds Treasuries never reaches maturity, so the price change is permanent unless yields fall back; T-bill ETFs vs buying T-bills explains why short funds avoid most of this. When and how to sell before maturity is in selling Treasuries before maturity, and current yields by maturity are on the Treasury yield curve page.
What is reinvestment risk for T-bill holders?
It is the risk that a maturing bill can only be rolled into a lower rate, which cuts income even though the principal never changes. Bills face it most because they mature so often.
The sharpest example is the 2007 to 2008 easing cycle. The 3-month par yield averaged 4.96% in July 2007 and 0.04% in December 2008. On $100,000 kept in rolling 3-month bills, that is the difference between about $4,960 and about $40 a year of interest, with no loss of principal at any point. The Fed's target range then stayed at 0% to 0.25% until December 2015, so the income did not come back for seven years.
Notes and bonds carry a smaller version of the same risk, because their coupons have to be reinvested at whatever rates prevail. The protection is to fix rates for longer, which brings back price risk, or to stagger maturities so that only part of the money reprices at once. Short-term vs long-term Treasuries puts numbers on that trade, a T-bill ladder spreads the rollover dates, and the Treasury bill calculator shows what a given rate pays on a given amount.
Are Treasuries always easy to sell?
Usually, through a broker on any business day, but how quickly you can sell depends on where you hold them, and even this market has seized up under stress. Treasuries are among the most traded securities in the world, yet the account you use sets the practical limits.
- TreasuryDirect. Securities there cannot be sold inside the account. You must hold them for 45 calendar days and then transfer them to a bank or broker to sell.
- Brokers. Sales settle on the next business day, and you receive the bid price. On small lots and older issues the gap between bid and ask is wider than on the most recent auction.
- Savings bonds. I bonds and EE bonds are not marketable, so they cannot be sold, only cashed in. I bonds are Not cashable for 12 months; cashing before 5 years forfeits the last 3 months of interest.
Market stress can also strain the market itself. On March 15, 2020, as investors raced for cash, the FOMC said it would increase its holdings of Treasury securities by at least $500 billion to support the smooth functioning of markets for Treasury securities, and on March 23 it committed to buy in the amounts needed. The simplest defense against liquidity risk is to own securities that mature when you need the money, which is the logic behind where to park cash for the short term.
None of these risks is a reason to avoid Treasuries; they are the terms of the trade. The backing removes the risk that matters most for cash, not being repaid, and leaves the others for you to manage through maturity choice, account type and the mix with inflation-linked securities. Figures here are dated history and stated assumptions, not forecasts.