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Perpetual knowledge bank series: US treasuries

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The US Treasury is a key US government department in charge of managing all Federal finances. While it is responsible for enforcing a wide variety of US finance and tax laws, it is also the government department responsible for issuing all Treasury bonds, notes, and bills. These bonds are considered to be among the safest and most liquid securities worldwide in what is a $US23.7 trillion ($36.5 trillion) US Treasuries market. It is worth noting that the US Treasury and the Federal Reserve are separate entities, with the latter’s primary responsibility being to keep the economy stable by managing the supply of money in circulation.

US government debt has traditionally been very attractive to everyone from US commercial banks, fund managers and life insurers to global pension providers, foreign governments and central banks. While the Fed Reserve became the largest holder of US Treasury assets globally during the Covid pandemic, Japan has historically been the biggest foreign buyer of US treasuries. As of May 2022, Japan held US Treasury securities totalling about $1.21 trillion. Typically, Japanese buying has favoured intermediate sectors of the Treasury curve from five- to 10-year notes, while life insurers and pension funds have focused on 30-year bonds.

This analysis has been prepared by Perpetual Investment Management Limited (PIML) ABN 18 000 866 535, AFSL 234426. It is general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. You should consider, with a financial adviser, whether the information is suitable for your circumstances. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information.

The information is believed to be accurate at the time of compilation and is provided in good faith. This document may contain information contributed by third parties. PIML and PSL do not warrant the accuracy or completeness of any information contributed by a third party. Any views expressed in this document are opinions of the author at the time of writing and do not constitute a recommendation to act. 

The product disclosure statement(PDS) for the Perpetual Diversified Income Fund issued by PIML, should be considered before deciding whether to acquire or hold units in the fund. The PDS and Target Market Determination can be obtained by calling 1800 022 033 or visiting our website http://www.perpetual.com.au

No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor’s capital. Past performance is not indicative of future performance.