Treasury bonds (often called T-bonds) are commonly referred to as being ultra-safe. The conventional wisdom goes something like this: “The U.S. Treasury issues various securities of differing maturities. Like any widely traded security, you can buy them when they are issued and hold them to maturity or buy and sell them in the market at any time. Because Treasury securities are backed by the U.S. government, they are the ultimate safe investment.”
But are T-bonds, which have the longest maturities of all Treasury securities, really the ultimate safe investment? That depends on how you define safe. T-bonds are safe from default risk but they also carry of great deal of price risk.
In your view, are Treasury bonds as safe as some people claim? Under what conditions do T-bonds make the most sense for investors? When do they make the least sense?