UST is the abbreviation for United States Treasury, and it is commonly used for references to the Treasury debt that the U.S. issues. Traders use the phrases "UST yields" to refer to Treasury yields or "UST curve" to refer to the Treasury yield curve with regard to asset pricing. The U.S. Treasury is the department of government that is responsible for issuing debt in the form of Treasury bonds, bills and notes.


The U.S. Treasury issues securities to raise money to run the federal government. Some of the government branches operating under the U.S. Treasury umbrella include the Internal Revenue Service (IRS), the U.S. Mint, the Bureau of the Public Debt and the Alcohol and Tobacco Tax Bureau. In addition to treasury bills, the U.S. Treasury issues notes, bonds, fixed-rate notes (FRN) and U.S. Savings Bonds.

The United States Treasury

The function of the U.S. Department of Treasury is the management of money and cash flow for the federal government. It manages the sources and uses of funds. It also works in conjunction with the Federal Reserve to develop economic policy.

Formally established in 1789 by the First Session of Congress, the institution came into being prior to the signing of the Declaration of Independence. Alexander Hamilton was the first Secretary of the Treasury, installed on Sept. 11, 1789.

UST Securities and Asset Pricing

Much of finance is about the pricing of assets. UST securities are assumed to have virtually no risk of default. As a result, these securities are often used as a proxy for a risk-free asset.

UST securities set the benchmark for pricing assets. If UST securities are trading for 3%, all other fixed-income securities with the same characteristics trade at some price higher than 3%. It is assumed that there is no borrower with better credit than the United States.

Measures of risk can be based on metrics such as debt ratios and price volatility. A greater leverage or price volatility leads to a greater risk of not being paid back principal and interest on the investment. Risk is synonymous with return probabilities as well. Investments that offer the possibility of making greater returns are priced higher, even if that possibility is slim. A higher level of risk associated with an investment means a higher possible return; a down side to owning UST securities is less income.

In addition to marketable securities, there are also non-marketable UST securities. These securities are not transferable; they cannot be traded on an exchange. UST savings bonds fall into this group.

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  3. Which economic factors impact treasury yields?

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