Treasury Investment Tips

• The U.S. government is sometimes criticized for having a large national debt.stocks and shares image by Andrew Brown from Fotolia.com
  
  Treasury investments refer to investments in fixed-income securities issued by the U.S. Department of the Treasury, notably Treasury bills (T-Bills) and Treasury bonds (T-Bonds). T-Bills refer to short-term (typically less than nine months) debt securities. Terms for T-Bonds are longer and can be as long as 20 years. Treasury securities are used to finance expenditures of the U.S. government, and the amount due on T-Bills and T-Bonds constitutes the U.S. national debt, according to the U.S. Treasury Department website.
  
  

Watch Inflation and Interest Rates

• Inflation and prevailing interest rates are two major variables to consider when investing in Treasury securities. The higher the inflation and prevailing interest rates in the country, the higher the interest rate you should demand from your Treasury investments. Even if inflation and interest rates throughout the country are low, consider what those variables will be while T-Bonds mature. The Investing In Bonds website suggests that if you expect inflation to be higher than other investors believe, abstain from buying Treasure securities and put your money elsewhere.
  
  

Monitor Market Risk Sentiment

• When markets panic, investors flock to the relative safety of government securities, driving up their prices and lowering interest rates the Treasury needs to pay for its debt instruments. (The interest rates on Treasury securities are determined at special auctions by supply and demand factors.) Based on research performed by Tim Iacona of Iacona Research and reported on the Seeking Alpha website in 2008, investors should buy Treasury securities at times of turbulence and sell them when things are going well and market volatility is low.
  
  

Pay Attention to the National Debt and Budget Deficit

• National debt and federal budget deficits matter. The higher the debt the government accumulates, the more difficult it becomes to service it, raising the temptation for the government to inflate away its debts or risk defaulting on them. The Department of the Treasury website provides reports and data that reflect how the national debt and federal budget impact Treasury securities.