A US Treasury bond is a bond issued by the United States Government. When the US Government needs to borrow money to pay its obligations, such as funding federal programs or paying federal employee wages, it can sell US Treasury bonds to investors.
US Treasury bonds are a form of debt for the US Government. Because when it sells you a US Treasury bond, it is borrowing money from you. And it has to pay you back at a later date.
The US Government is considered one of the safest institutions to loan money to. It borrows money at the lowest interest rate of any US institution. This rate is called the Risk-Free Rate. When the US Government issues new bonds, the risk-free rate is the coupon paid to investors.
US Treasury Bonds are tax-exempt at the state level, which means when you receive your coupon payment, you don’t have to pay state tax on it.
US Treasury Bonds are also very Liquid, which means you can trade them quickly and easily in the market.