The Treasury Bill Market is a component of the Money Market and is the market where Treasury Bills are bought and sold. There is a primary treasury bill market where treasury bills are initially sold and there is the secondary treasury bill market where treasury bills are resold.
Treasury Bills ( T-Bills ) are money market instruments issued by the federal government to cover budget deficits which occur when expenses are greater than tax revenues. Treasury Bills are the most important type of debt issued by the federal government. Treasury bills are sold weekly through an auction process and they come in different terms-of-maturity and denominations. Treasury Bills are sold with original maturities of 28 days (4 weeks), 91 days (13 weeks), and 182 days (26 weeks) and they are typically issued in denominations of $10 million, $15 million, $50 million, $100 million and $500 million. The minimum denomination is $1000 for the purpose of giving individual investors the capability of investing in treasury bills directly from the U.S. Treasury. U.S Treasuries are backed by the U.S. government and have virtually no default risk. The U.S. government has never defaulted on a payment and therefore the interest rate paid on Treasury Bills is often referred to as "the risk-free rate". There is relatively low price risk due to their short maturities; and they can easily be converted into cash for low transaction costs due to their marketability.