Treasury Direct

AAA

DEFINITION of 'Treasury Direct'

The online market through which investors can purchase federal government securities directly from the U.S. Treasury. Treasury Direct sells Treasury bills, notes, bonds, Treasury inflation-protected securities (TIPS) and savings bonds, all of which are backed by the full faith and credit of the U.S. government and are used to finance the federal debt.

BREAKING DOWN 'Treasury Direct'

The online Treasury Direct trading system eliminates banks, brokers and dealers as middlemen, saving investors money on commissions and fees. Investors can still purchase Treasury securities through these traditional channels if they wish.

Treasury securities are sold through an auction process, and this process establishes a security’s rate and yield. Investors can place either competitive or non-competitive bids. Competitive bidders specify the rate, yield or discount margin the investor will accept; non-competitive bidders agree to accept the rate, yield or discount margin that the auction establishes. At the auction’s close, the Treasury first issues securities to all non-competitive bidders, then to competitive bidders from lowest to highest bid, until it has issued the total amount of securities provided for by that auction. All accepted bidders receive the terms of the highest accepted offer. The minimum required investment in the Treasury Direct market is $100.

The online Treasury Direct system is the main way the U.S. Treasury sells its securities. To open a Treasury Direct account, investors must have a Social Security number or taxpayer identification number, a U.S. address, a checking or savings account for transferring funds to and from a Treasury Direct account, an email address and a secure Web browser and Internet connection. Individuals, institutions, corporations, partnerships, limited liability companies, sole proprietors, estates and trusts can also have Treasury Direct accounts. 

Find out how your tax refund can go directly towards the purchase of Treasury Direct securities; check out What are the benefits of splitting my tax refund?

RELATED TERMS
  1. Federal Reserve Bank

    The central bank of the United States and the most powerful financial ...
  2. Dealer Market

    A financial market mechanism wherein multiple dealers post prices ...
  3. Note Auction

    A formal bidding process that is scheduled on a regular basis ...
  4. Auction Market

    A market in which buyers enter competitive bids and sellers enter ...
  5. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with ...
  6. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
Related Articles
  1. Investing Basics

    Inflation Protected Securities: How They Work

    Learn how the U.S. Treasury inflation-protected securities (TIPS) work, which considerations investors should keep in mind and for whom TIPS are most suitable.
  2. Economics

    The Federal Reserve

    Few organizations can move the market like the Federal Reserve. As an investor, it's important to understand exactly what the Fed does and how it influences the economy.
  3. Bonds & Fixed Income

    Basics Of Federal Bond Issues

    Treasuries are considered the safest investments, but they should still be analyzed when issued.
  4. Investing

    The Advantages Of Bonds

    Bonds contribute an element of stability to almost any portfolio and offer a safe and conservative investment.
  5. Active Trading

    Buy Treasuries Directly From The Fed

    If you want government securities, go straight to the source. We'll show you how.
  6. Investing News

    Fund Firm Jolts: Pimco's Isn't The First Or Worst

    When you business is built on prudence and trust, a lot can go wrong to cost you tons of clients and assets. Here are a few examples.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares JPMorgan USD Emerg Markets Bond

    Learn about the iShares JPMorgan USD Emerging Markets Bond fund, which invests in bonds of sovereign and quasi-sovereign entities from emerging markets.
  8. Investing News

    China's Government to Stop Intervening in Stock Markets

    China’s stock market, measured by Shanghai Composite Index, lost about 17% of its value in the first three days of week ending August 28, 2015 before recovering its value by 11% in the last two ...
  9. Investing Basics

    What's a Treasury Note?

    A treasury note is a U.S. government debt security that offers a fixed interest rate and a maturity date that ranges between one and 10 years.
  10. Investing

    Five Things to Consider Now for Your 401(k)

    If you can’t stand still, when it comes to checking your 401 (k) balance, focus on these 5 steps to help channel your worries in a more productive manner.
RELATED FAQS
  1. Where can I buy government bonds?

    The type of bond determines where you can purchase it, so you need to decide which type of bond you would like to purchase ... Read Full Answer >>
  2. How is the Federal Reserve audited?

    Contrary to conventional wisdom, the Federal Reserve is extensively audited. Politicians on the left and right of a populist ... Read Full Answer >>
  3. Who decides when to print money in the US?

    The U.S. Treasury decides to print money in the United States as it owns and operates printing presses. However, the Federal ... Read Full Answer >>
  4. Why do some people claim the Federal Reserve is unconstitutional?

    The U.S. Constitution does not mention the need for a central bank, nor does it explicitly grant the government the power ... Read Full Answer >>
  5. What are the maximum Social Security disability benefits?

    The maximum Social Security disability benefit amount for a single eligible person in 2015 is $1,165 per month, but you can ... Read Full Answer >>
  6. How can the federal reserve increase aggregate demand?

    The Federal Reserve can increase aggregate demand in indirect ways by lowering interest rates. Aggregate demand is a measure ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  2. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  3. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  4. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  5. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  6. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!