A 90-Day Treasury is a short-term U.S. government debt instrument with a maturity of 90 days, offering low risk and often used as a benchmark for short-term interest rates.
A 90-Day Treasury, formally known as a 13-week Treasury bill or T-bill, is a short-term government security issued by the U.S. Department of the Treasury. These instruments are sold at a discount from their face value and mature in 90 days, at which point the full face value is paid to the investor. The difference between the purchase price and the face value represents the investor's return. Due to their short maturity and being backed by the full faith and credit of the U.S. government, 90-day Treasuries are considered one of the safest and most liquid investments. They're issued through regular government auctions and are widely held by money market funds, institutional investors, and individuals seeking to park cash safely in periods of market uncertainty or rising interest rates. These T-bills do not pay interest (coupon) in the traditional sense; rather, investors receive their earnings via the difference between the discounted purchase price and the maturity amount. Their yield is often referenced as a proxy for risk-free interest rates in the short term. In capital markets, the 90-Day Treasury rate is a critical benchmark used in pricing money market instruments, evaluating economic conditions, and constructing financial models including the calculation of opportunity cost and discount rates.
The 90-Day Treasury serves as a foundational component in liquidity and cash management strategies for family offices. Given its ultralow default risk and short duration, it functions as an efficient parking place for idle capital or as a benchmark rate for determining portfolio yield floors and short-term fixed income performance. Its yield can also influence interest rate expectations, making it a useful tool for adjusting asset allocation strategies or hedging against market volatility. Furthermore, T-bill holdings offer clarity and transparency in reporting, supporting compliance and governance requirements, especially in multi-generational family structures.
A family office allocates $5 million into 90-Day Treasury bills during a period of heightened market volatility to protect capital and maintain liquidity. If a T-bill is purchased at 99.65 per $100 face value, the return on maturity is $100, translating into a yield of roughly 1.4% annualized. This decision preserves stability in the short-term allocation while allowing for rapid re-deployment once market conditions improve.
90-Day Treasury vs. 30-Day Yield
While the 90-Day Treasury is a specific government-issued security maturing in 90 days, the 30-Day Yield (often used in reporting for bond funds) represents a hypothetical annualized return based on the past 30 days of interest income. The former is a direct investment vehicle, while the latter is a backward-looking return estimate used for comparative and portfolio analytics.
Are 90-Day Treasuries the same as certificates of deposit (CDs)?
No. 90-Day Treasuries are government-issued and carry no credit risk, while CDs are issued by banks and may offer higher yields but are subject to FDIC limits and bank creditworthiness.
Do 90-Day Treasuries pay interest?
They don't pay periodic interest. Instead, they are sold at a discount and redeemed at par, with the difference acting as your earnings (imputed interest).
Can 90-Day Treasuries be sold before maturity?
Yes, they can be sold on the secondary market, although the price will depend on prevailing interest rates. Liquidity is generally high, making them easy to liquidate.
