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Types of Bonds

The U.S. Treasury Market and Inflation-Protected Securities

The United States Department of the Treasury currently offers a special kind of security, called a Treasury Inflation-Protected Security (TIPS)*, whose principal amount is adjusted for inflation. The Treasury Department issues TIPS because it believes their issuance will reduce interest costs to the Treasury over the long term and will increase the different types of investors that buy their debt instruments.

*Prior to 2004 this security was referred to by Treasury as a Treasury Inflation-Indexed Security. However, Treasury renamed these securities to “inflation-protected” securities so that the resulting acronym, TIPS, conforms with the way these securities are commonly referred to by market participants and the press.


All information and opinions contained in this publication were produced by the Securities Industry and Financial Markets Association from our membership and other sources believed by the Association to be accurate and reliable. By providing this general information, the Securities Industry and Financial Markets Association makes neither a recommendation as to the appropriateness of investing in fixed-income securities nor is it providing any specific investment advice for any particular investor. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and sources may be required to make informed investment decisions.