Dumb Question - US Treasury Bonds in Fidelity

Still doesn’t make sense too me..

The price of the bond adjusts based on the going yield. If investors stop buying bonds and the maturity you're holding goes up in yield, then the value of said bond goes down to find a buyer. If investors are piling in on bonds, then the price of the bond would go up and thus the yield would go down. It's a inverse constantly adjusting relationship.

The actual bonds all have different actual coupon payouts throughout their life, either semi annually, or annually, or no coupon at all, and the coupon is based on whatever it was when the bond was originally auctioned by the treasury.

The coupon doesn't matter all that much, it would be adjusted into the price your paying, it's really just a cash flow thing if you want to get some small amount of cash from the bond while you wait for either maturity or to sell if yields go down, thus making your bond worth more and you could take cap gains and get out. Otherwise you can always sit until maturity and get the original interest you bought it at.

That's why you can buy a bond that will come back to you at 100, and you're paying 96 or whatever, the bond was issued at a different yield and the secondary markets buy and sell the bonds over and over at different yield price adjustments based on the current market.

The only way to get a bond fresh off an auction is directly from the treasury via treasury direct for example. I find it easier to just buy secondary market bonds thru etrqde or what have you.

That's the very basic explanation

Because the face coupon is .375%. You get the yield to 4.8% by paying less than face for the bond. So the bond sells at a discount to face value to get the yield up to current market rates so the bond will trade.

This may help you. A poster who is well versed in Treasuries offered this link as a resource awhile back.

How To Buy Treasury Bills & Notes Without Fee at Online Brokers

There are Treasury bonds, notes and bills. Bills have the shortest maturity and bonds have the longest. The major differences between them are the maturities and how the interest is paid - as the gentlemen above have explained. You can buy new issues or already issued through your brokerage. If you want them held in your name, you can easily open an account and buy them directly from Treasury Direct.

I only buy new issues, usually through my brokerage, as there is no commission involved with new issues at my brokerage and it’s easier to liquidate them should I choose to sell prior to maturity.

Hope that helps.

Yea, an example is the best way to explain it, and you nailed it.

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It shows a Yield of 4.8%ish. Does the 0.375% just mean that it'll accrue at 0.375% and then a maturity I'll get the full 4.8%?

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Your yield calculation is a combination of interest (coupon) payments that can possibly be as low as 0% and principle payment at maturity, which can possibly more or less than you paid for the bond.

If you’re paying less than face value, your yield will be higher than the stated coupon rate, like your 4.8% yield on a .375% coupon. I’d you’re paying more than face value, your yield will be less than the stated coupon rate.

For example, you can buy bonds with coupon payments of 7%+ all day, but you’re not going to earn 7% yield since you’ll be paying over face value for those bonds.