Chapter 3: The Treasury menu
The US Treasury runs the world's most boring store. There are no sales, no loyalty points, and exactly one supplier, yet it offers the best customer protections in finance: the full faith and credit of the US government, a $100 minimum order, and a standing promise that the smallest buyer gets the same rate as the largest bank on earth. This chapter reads the whole menu, then watches Quinn place her first order.
What's on the menu
Everything the Treasury sells is a loan to the US government. The differences are term and packaging, and the store keeps them on two shelves.
Treasury bills run 4 to 52 weeks and pay no coupon at all. Instead you buy at a discount: pay a little less than face value today, receive full face value at maturity, and the difference is your interest. The store restocks constantly. The 4, 6, 8, 13, 17, and 26-week bills auction every week, and the 52-week auctions every four weeks, so there is always a bus leaving. Here is the board from the most recent auctions as this guide went to data:
| Bill term | Investment rate (auctions of June 8–11, 2026) |
|---|---|
| 4-week | 3.66% |
| 8-week | 3.68% |
| 13-week | 3.73% |
| 17-week | 3.76% |
| 26-week | 3.81% |
| 52-week | 3.91% |
One worked discount makes the mechanism concrete. At the 13-week bill's 3.73% investment rate from the June 8, 2026 auction, $10,000 of face value cost about $9,908 at issue. Thirteen weeks later the Treasury deposits the full $10,000, and the roughly $92 difference is the interest, earned without a single coupon changing hands.
Treasury notes run 2 to 10 years and pay a fixed coupon every six months, plus face value at the end. They are the bonds Dev read in Chapter 2: on June 11, 2026 the 2-year yielded 4.05% and the 10-year 4.45% (treasury.gov). Treasury bonds are the same machine stretched to 20 and 30 years, with the 30-year at 4.95% on the same date. Remember the seesaw before the longer yields tempt you; those are the farthest seats on the plank.
The bottom shelf holds the inflation specialists. TIPS adjust their principal with inflation and quoted a 2.16% real yield on the 10-year as of June 11, 2026; I bonds, the savings-bond cousin, paid a 4.26% composite rate for bonds issued May to October 2026 with a $10,000 per person yearly cap and a 12-month minimum hold. Both get full treatment in Chapter 9. Floating rate notes, whose interest resets with bill auctions, complete the menu; you now know they exist, which is roughly all most savers ever need to do with them.
How an auction works
The Treasury does not post prices like a grocery store. It sells everything by auction, and the design is unusually friendly to small buyers.
Every auction takes two kinds of bids. Competitive bids come from the giants, primary dealers and institutions, who state the exact rate they demand. The Treasury accepts the lowest demands first until the offering is sold, and the rate where the last accepted bid lands becomes the auction's rate. Noncompetitive bids are what you submit: you state only an amount, up to $10 million per auction, and you agree in advance to accept whatever rate the auction produces. In exchange, your order always fills, in full, at exactly the rate the giants just fought each other down to. You skip the negotiation and keep the outcome.
Do small buyers get a worse rate at auction?
No, and this is the single best consumer deal in fixed income. A noncompetitive bid receives exactly the investment rate that the competitive auction produces, whether the bid is $100 or $10 million. When the June 8, 2026 auction set the 13-week bill at 3.73%, every pension fund, every primary dealer, and every nurse in Sacramento who bid noncompetitively got 3.73%. There is no retail markup, no spread, and no fee at TreasuryDirect; brokerages also typically charge nothing to place Treasury auction orders, though their cash sweep rates around the purchase can differ. Compare that with most of the financial world, where small orders quietly pay wider spreads, and the auction starts to look like what it is: a store where the wholesale price is the only price.
TreasuryDirect or your brokerage?
Both routes lead to the same auction and the same rate, so the choice is about plumbing. TreasuryDirect is the Treasury's own site: $100 minimum and $100 increments, no fees, and bids in your own name. Its main limitation is the exit. TreasuryDirect has no secondary market, so if you need to sell a bill before maturity you must first transfer it to a brokerage, a process that takes paperwork and patience. For money with a known date, that limitation costs nothing, because the plan was always to hold to maturity. A brokerage account places the same noncompetitive auction bids, usually free, and adds conveniences: everything sits on one statement, bills can be sold before maturity on the secondary market if life surprises you, and most brokers offer autoroll, which reinvests a maturing bill into the next auction of the same term automatically. Chapter 4 leans on autoroll heavily when it builds ladders. A fair summary: TreasuryDirect for simplicity and pure hold-to-maturity money, a brokerage for flexibility, and no wrong answer at these account sizes.
The quiet superpower: no state tax
Treasury interest is exempt from state and local income tax, though it is taxed federally (TreasuryDirect; IRS Topic 403). In a no-income-tax state this is a shrug. In California, where Quinn lives, it has teeth. Suppose $10,000 rides 13-week bills for a full year at the June 8, 2026 rate of 3.73%, an assumption, since each roll will reprice. That is about $373 of interest. A bank account paying the same 3.73% would hand about $35 of that to Sacramento at her 9.3% state bracket; the bills keep it. The effect makes a T-bill quietly out-earn a savings account with an identical headline rate, and Chapter 4 turns this edge into a precise bank-equivalent number. Deeper bracket math lives in the Finvest Tax Playbook.
Quinn's first auction, screen by screen
Quinn arrives with the $3,000 she set aside in Chapter 1 and a Thursday evening. Here is her entire path.
- Open the account. At TreasuryDirect she enters her Social Security number, address, and bank account details for linking. The slowest step is choosing a password.
- Find the order form. Inside the account she selects BuyDirect, then Bills. The form lists upcoming auctions by term with their dates pulled from the auction schedule.
- Pick the term. She chooses the 13-week bill and the next auction date. Nothing on this screen asks her to predict rates, which she finds calming.
- Enter the amount. She types $3,000. The bid is noncompetitive, which for individuals at TreasuryDirect is the standard path: she will accept the auction's rate, whatever it is.
- Choose what happens at maturity. One dropdown: deposit the money back to her bank, or schedule reinvestment into the next 13-week auction. She picks reinvestment, building the habit Chapter 4 will formalize.
- Auction day. The auction runs without her. It sets the investment rate, 3.73% on June 8, 2026, and on the issue date her bank account is debited about $2,972 for $3,000 of face value. Thirteen weeks later, $3,000 of buying power rolls forward, about $28 heavier.
Quinn's honest review, texted to her brother: "Buying a T-bill was less work than returning a sweater." What surprised her was the absence of decisions. No rate to guess, no seller to evaluate, no fine print about teaser periods; the one number that mattered was set by an auction she did not have to attend, and it was the same number the big banks got. Her $28 per cycle will not change her life. The system she just learned, repeated and scaled across the ladder she builds next chapter, is a different story.
Buy Treasuries at auction with a noncompetitive bid, in $100 steps, with money that has a date. You will get the wholesale rate every time, and the only skill required is knowing when you need the money back.
Where people go wrong
- Waiting to "time" an auction. Bills auction every single week. The rate you get is the market rate of that week, and no amount of hovering improves a noncompetitive bid.
- Putting must-touch money in TreasuryDirect. No secondary market means no fast exit. Money that might be needed before maturity belongs at a brokerage, or in the Chapter 1 jars.
- Confusing the bottom shelf with the top. TIPS and I bonds solve inflation problems, carry their own rules, and reward the full Chapter 9 treatment; they are not a higher-yield substitute for next quarter's bill.
- Forgetting the state-tax line when comparing rates. A 3.73% bill and a 3.73% APY bank account are not a tie in a 9.3% state. The bill wins by the tax, every year, automatically.
Key takeaways
- Everything on the Treasury menu is a loan to the US government: bills (4–52 weeks, sold at a discount), notes (2–10 years, coupons), bonds (20–30 years), plus TIPS, I bonds, and FRNs on the inflation-and-specialty shelf.
- The June 2026 bill board ran from 3.66% at 4 weeks to 3.91% at 52 weeks (auctions of June 8–11, 2026), with the 13-week at 3.73%.
- Noncompetitive bidding means you state an amount up to $10 million, always get filled, and receive the same rate the institutional auction set. The minimum is $100.
- TreasuryDirect offers fee-free simplicity with no early exit; a brokerage adds secondary-market sales and autoroll. Both reach the same auction.
- Treasury interest skips state and local income tax (taxed federally). On $10,000 at 3.73%, a 9.3% state bracket keeps about $35 a year that a same-rate bank account would lose.
Sources: TreasuryDirect: Treasury bills · TreasuryDirect auction results · TreasuryDirect: tax treatment · TreasuryDirect: I bonds · Treasury daily yield curve · IRS Topic 403: interest income · Finvest Tax Playbook