A 1-Year Treasury is a U.S. government debt security with a maturity of one year, offering a low-risk, fixed interest return.
A 1-Year Treasury, also called a 1-Year Treasury Bill or Note depending on its structure, is a short-term government debt instrument issued by the U.S. Department of the Treasury. It matures in one year or less from the issue date. These securities are considered nearly risk-free as they are backed by the full faith and credit of the U.S. government. The yield on a 1-Year Treasury serves as a benchmark for short-term interest rates and reflects market expectations for monetary policy, inflation, and economic growth over the upcoming year. Investors purchase these Treasuries either through auctions or the secondary market, typically at a discount to par and receive the full face value at maturity. In financial markets, the 1-Year Treasury plays a vital role in yield curve analysis, portfolio diversification, and interest rate forecasts. It is also frequently used by investors seeking capital preservation, cash management, and lower volatility exposure. Because of their short duration and low credit risk, 1-Year Treasuries are attractive to conservative investors and institutions managing large pools of liquid capital, especially during volatile market conditions or when interest rate movements are uncertain.
The 1-Year Treasury is a key instrument for liquidity management, risk control, and capital preservation in family office portfolios. It offers a reliable fixed-income allocation with minimal credit risk, making it a useful tool for parking cash temporarily or balancing risk in multi-asset portfolios. With interest rate changes directly impacting the yield of 1-Year Treasuries, they are often used in tactical adjustments for fixed income allocations. Additionally, the yield on this instrument serves as a reference rate in portfolio benchmarking and plays a role in determining hurdle rates for performance-based compensation or capital deployment strategies.
A family office with $10 million in temporarily unallocated capital may choose to invest $2 million in 1-Year Treasuries yielding 4.5%. The investment allows the capital to generate $90,000 in interest over 12 months while remaining highly liquid and protected from credit risk. This short-term parking of cash preserves the value and provides planning flexibility for future allocations to longer-duration or higher-yielding assets.
1-Year Treasury vs. 10-Year Treasury
While both are U.S. government securities, the 1-Year Treasury focuses on short-term interest rate risk with minimal duration, whereas the 10-Year Treasury exposes investors to greater interest rate volatility and is more sensitive to changing inflation expectations. The 1-Year is preferred for liquidity and near-term certainty, while the 10-Year suits long-duration planning and yield enhancement.
Are 1-Year Treasuries the same as Treasury bills?
While both can mature in one year or less, Treasury bills (T-bills) are typically issued at a discount with no interest payments, whereas a 1-Year Treasury Note pays periodic interest. The term '1-Year Treasury' may refer to either, depending on the structure issued by the U.S. Treasury.
How are 1-Year Treasuries taxed?
Interest income from 1-Year Treasuries is subject to federal income tax but exempt from state and local taxes, making them slightly more tax-efficient than equivalent corporate bond instruments, especially in high-tax states.
Can 1-Year Treasuries lose value?
If held to maturity, 1-Year Treasuries do not lose value and repay face value. However, if sold before maturity in the secondary market, their price may fluctuate based on prevailing interest rates and market demand.
