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What are Off-the-Run Treasuries?

An off-the-run Treasury is any Treasury bill or note that is not part of the most recent issue of the same maturity.

How Do Off-the-Run Treasuries Work?

For example, let's assume that in March, the U.S. Treasury issues 10-year bonds. Six months later, in September, it issues another batch of 10-year Treasury bonds. The March issue of Treasuries becomes off the run; the September issue is now 'on the run.'

Why Do Off-the-Run Treasuries Matter?

Off-the-run Treasuries trade on a secondary market and typically have lower valuations (and higher yields). However, one of the most unique characteristics of off-the-run Treasuries is that they tend to construct a more accurate yield curve than on-the-run Treasuries do. This is because on-the-run Treasuries tend to have some price distortions caused by the fluctuating current demand for on-the-run Treasuries.

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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.