The 6-month Treasury bill yields 4.85% as of mid-March 2026, offering investors a risk-free return that exceeds the current inflation rate of 2.4%. The 1-year Treasury yields 4.52%, the 2-year 4.10%, and the 10-year 3.92%. For investors seeking safety while earning a real (inflation-adjusted) return, short-term Treasuries present one of the best opportunities in over a decade.
The yield curve remains mildly inverted, with short-term rates exceeding long-term rates. This inversion reflects the market's expectation that the Federal Reserve will eventually cut rates, reducing short-term yields. But with the Fed holding steady at 3.50-3.75% and inflation concerns rising due to oil prices, rate cuts appear unlikely before September at the earliest.
Current Treasury Yield Snapshot
- 3-month T-bill: 4.92%
- 6-month T-bill: 4.85%
- 1-year Treasury: 4.52%
- 2-year Treasury: 4.10%
- 5-year Treasury: 3.98%
- 10-year Treasury: 3.92%
- 30-year Treasury: 4.18%
Why Short-Term Treasuries Make Sense Now
Short-term Treasuries offer three advantages in the current environment. First, they provide a positive real yield. At 4.85% with inflation at 2.4%, the real return is approximately 2.45%, the highest since 2007. Second, they carry zero credit risk because they are backed by the US government. Third, short maturities insulate investors from interest rate risk: if rates rise, you simply reinvest at the new higher rate when your bill matures.
Compared to corporate bonds, which require credit analysis, and stock dividends, which fluctuate with earnings, Treasury yields are guaranteed. A $100,000 investment in 6-month T-bills generates $2,425 in interest over six months, tax-exempt from state and local income taxes in most jurisdictions.
"For the first time in 15 years, cash and near-cash investments offer a legitimate return," said Kathy Jones, chief fixed income strategist at Charles Schwab. "Investors no longer need to stretch for yield in risky assets. A 5% risk-free return changes portfolio math fundamentally."
How to Buy Treasury Bonds
TreasuryDirect.gov
Buy directly from the US Treasury with no fees. You can purchase T-bills in increments as small as $100 at auction. The process is straightforward: create an account, link your bank, and select your maturity. Auctions occur weekly for short-term bills.
Brokerage Accounts
Major brokerages including Fidelity, Schwab, and Vanguard allow Treasury purchases on the secondary market. You can buy at any time, not just at auction, and sell before maturity if needed. Spreads are minimal, typically 1-2 basis points.
Treasury ETFs
The iShares 0-3 Month Treasury Bond ETF (SGOV) holds ultra-short T-bills and yields approximately 4.9%. The SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) is similar. These ETFs provide daily liquidity and can be held in any brokerage account. Expense ratios are minimal at 0.05-0.09%.
The Duration Decision
If the Fed cuts rates later in 2026, short-term yields will fall. Locking in a 2-year or 5-year Treasury at 4.10-3.98% guarantees that rate for the full maturity period. Longer-duration bonds also benefit from price appreciation when rates fall. A 10-year Treasury with a 3.92% coupon would gain approximately 7% in price if yields fell 1 percentage point.
A barbell strategy, combining short-term T-bills (for current income and flexibility) with longer-term bonds (for rate-decline protection), balances both scenarios. Allocate 60% to 3-6 month T-bills and 40% to 5-10 year notes. Reassess quarterly as economic data and Fed guidance evolve.
