posted on 06-06-2019

Off-the-Run Treasuries

Updated October 1, 2019

What are Off-the-Run Treasuries?

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 Do Off-the-Run Treasuries Work?

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 Do Off-the-Run Treasuries Matter?

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.