Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Off-the-Run Treasuries

What it is:

An off-the-run Treasury is any Treasury bill or note that is not part of the most recent issue of the same maturity.

How it works (Example):

For example, let's assume that in March, the U.S. Treasury issues 10-year bonds. Six months later, in September, it issues another batch of 10-year Treasury bonds. The March issue of Treasuries becomes off the run; the September issue is now "on the run."

Why it Matters:

Off-the-run Treasuries trade on a secondary market and typically have lower valuations (and higher yields). However, one of the most unique characteristics of off-the-run Treasuries is that they tend to construct a more accurate yield curve than on-the-run Treasuries do. This is because on-the-run Treasuries tend to have some price distortions caused by the fluctuating current demand for on-the-run Treasuries.

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