A 20-Year Treasury is a U.S. government bond with a maturity of 20 years, offering fixed interest payments and considered virtually risk-free. It serves as a benchmark for long-term interest rates and is widely used in portfolio allocation and interest rate modeling.
The 20-Year Treasury is a debt security issued by the U.S. Department of the Treasury with a fixed interest rate and a maturity period of 20 years. Investors receive semiannual coupon payments and a return of the principal amount upon maturity. These securities are considered virtually risk-free since they are backed by the full faith and credit of the U.S. government. First introduced in the 1980s, the 20-Year Treasury was discontinued in 1986 and reintroduced in 2020 to diversify borrowing options and support broader market maturity benchmarks. It fills the maturity gap between the 10-Year Treasury Note and 30-Year Treasury Bond, offering an intermediate duration instrument for fixed-income investors. The yield on the 20-Year Treasury is a critical indicator of long-term interest rate expectations, inflation forecasts, and economic outlook. It is actively traded in secondary markets and often used in yield curve analysis for policymaking and investment strategy. These securities are auctioned monthly and are accessible through TreasuryDirect for individual investors and through the secondary market via brokers for institutional buyers. Pricing is subject to prevailing interest rates and demand for long-duration, low-risk assets.
The 20-Year Treasury plays a strategic role in asset allocation for family offices seeking stability and fixed-income diversification. Its long-term duration and U.S. government backing appeal to investors aiming to balance risk and return in multi-generational portfolios. It is also useful in constructing liability-driven investment strategies, benchmarking interest rate risk, and modeling inflation expectations. For wealth managers, it offers a transparent and predictable component in estate planning and fixed-income ladders, particularly for trusts or philanthropic vehicles with long time horizons.
A family office allocates $10 million to fixed income and decides to invest $2 million into newly issued 20-Year Treasuries yielding 4.1% annually. This ensures reliable income of $82,000 per year from coupons, while preserving principal with near-zero credit risk. The investment helps offset more volatile equity positions and supports a predictable cash flow for client disbursements.
20-Year Treasury vs. 30-Year Treasury
While both are long-term U.S. Treasury securities, the 20-Year Treasury has a slightly shorter duration and often offers slightly lower yields than the 30-Year Treasury. The 20-Year option may be preferred by investors who seek long-duration exposure but with reduced interest rate sensitivity compared to the extra 10 years of a 30-Year Treasury.
Are 20-Year Treasuries risk-free?
They are considered virtually risk-free in terms of credit risk because they are backed by the U.S. government. However, they do carry interest rate risk and inflation risk over their 20-year duration.
How do you buy a 20-Year Treasury?
20-Year Treasuries can be purchased directly from the U.S. Treasury via TreasuryDirect during auctions or through brokers on the secondary market. Institutions tend to participate in auctions, while individual investors often use brokerage accounts.
What affects the yield of a 20-Year Treasury?
Yields are influenced by Federal Reserve policy, inflation expectations, economic growth forecasts, and supply and demand dynamics in the Treasury market.
