Skip to content
GetProfitable
Search
Dictionary

Treasury bond (long bond)

A US government bond with an original maturity beyond ten years, currently the 20-year and 30-year; the longest and most rate-sensitive part of the curve.

The 30-year, known as the long bond, is where duration lives. A modest move in yields produces a violent move in price, which is why pension funds and insurers use it to match long liabilities and why leveraged traders use it to express big macro views.

The long end is driven less by the next policy meeting than by term-premium, inflation expectations and the supply schedule set at quarterly-refunding. It can sell off even while the Fed is cutting, which is the classic bull-steepener.

Example: a 30-year bond with a 4% coupon has modified duration near 17.2. A 20 basis point rise in yield costs roughly 17.2 x 0.20% = 3.44% of price, or $34,400 on $1,000,000 of face.

Related: treasury-note, duration, term-premium, quarterly-refunding, treasury-strips

Educational only, not advice. Spotted an error? Post in Site Feedback.