Market Commentary

Congress Continues To Make Hefty Investments in U.S. T Bills

Aisha Khan
9 Jul 2024 · 3 minutes read

With nearly 420 trades by Congress members in the past three years, U.S. Treasury bills are the second-most traded asset as per our data.

U.S. Treasury bills (T-bills) are short-term debt instruments issued by the U.S. Department of the Treasury to support government funding. They are regarded as one of the safest investments because the full faith and credit of the U.S. government backs them.

In the trading process, T-bills are sold for less than their face (par) value. For instance, you might purchase a T-bill with a face value of $1,000 for $980. Upon maturity, you receive the full face value. Although U.S. Treasury bills (T-bills) are viewed as very secure investments, they do have certain drawbacks. Among other cons, Even though T-bills are not directly affected by interest rate risk due to their short-term nature, there can be indirect consequences. For example, if an investor sells a T-bill before it matures in a rising interest rate environment, they might get less than the original purchase price.

Bonds, Notes, & Bills

Despite their reputation as conservative and somewhat unexciting investments, Treasurys play a vital role in the global economy. Treasury bonds, notes, and bills are essential for both the government and investors.

In total, they consist of three assets, all defined by their maturity dates:

  • Treasury bonds, commonly referred to as long bonds, have the longest maturity period among government-issued securities, typically maturing in 20 or 30 years.

  • Treasury notes, similar to Treasury bonds, have shorter maturities ranging from two to ten years. Like T-bonds, they are also backed by the U.S. government.

  • Treasury bills, or T-bills, have the shortest maturities of all government securities, with terms of four, eight, 13, 26, and 52 weeks.

Congressional Trades of T-Bills

Since 2020, trades in treasury bills have seen a rise in popularity among Congress members. As per Capitol Trades data, in 2020, a total of 15 trades of the bills were reported by Congress. This number rose to 21 reported trades in 2021 before declining to 11 in 2022. In 2023, Congress members filed 255 trades in T-bills while 158 trades have been reported as of yet in 2024.

The most recent trade of T-bills in Congress was by Senator Tom Carper, who reported his spouse’s purchases and sales of the bills carried out throughout June 2024. Other lawmakers who bought T-bills in the past month were Rep. Rudy Yakym and Rep. Marjorie Taylor Greene. Both bought up to $50,000 and $250,000 on June 25 and June 21 respectively.

Other Congress members who have traded in the bills include, Rep. Michael McCaul, Rep. Earl Blumenauer, and Rep. Dan Meuser, among others.

The Demand

Recently, on July 3, 2024, CNBC reported a drop in the 10-year US treasury yield after reports of weak economic data. The 10-year U.S. Treasury yield dropped by more than 8 basis points to 4.352% following weak economic data, while the 2-year Treasury yield decreased to 4.698%, down nearly 4 basis points.

This decrease was prompted by reports suggesting a slowdown in the labor market. ADP data revealed lower-than-anticipated private payroll growth for June, and weekly unemployment claims exceeded forecasts.

U.S. Treasury bills remain a cornerstone of conservative investment strategies, favored for their safety and reliability. With the FED keeping interest rates as high as they are in the current climate, it appears that even Congress members are inclined towards the ‘safer’ investments like treasury bonds, notes, and bills.