where to trade off the run treasuries
while on the run treasuries are available to be purchased from treasury direct off the run securities can only be obtained from other investors through the secondary market when treasuries move to the secondary over the counter market they become less frequently traded as investors prefer to go for more liquid securities which are a characteristic of on the run treasuries to encourage investors to purchase these debt securities readily in the market off the run treasuries are typically less expensive and carry a slightly greater yield since off the run treasuries have a higher yield and lower price than on the run treasuries there is a notable yield spread between both offerings one reason for the yield spread is the concept of supply on the run treasuries are typically issued with a fixed supply the high demand for the limited securities pushes up their prices and in turn lowers the yield causing a difference to ensue between the yields for on the run and off the run securities in addition off the run securities are mostly held to maturity in an asset manager s portfolio as there s not much reason to trade them on the other hand when portfolio managers need to shift their exposure to interest rate risk and find arbitrage opportunities they trade on the run treasuries creating liquidity for these securities off the run yield curvesalthough on the run treasury yield can be used to construct an interpolated yield curve which is used to determine the price of debt securities some analysts prefer to use the yield of off the run treasuries to draw the yield curve off the run yields are used in cases where the demand for on the run treasuries are inconsistent thereby causing price distortions caused by the fluctuating current demand by deriving yield curve figures from the off the run treasury rates financial analysts can ensure that temporary fluctuations in demand do not skew the yield curve calculations or the pricing of fixed income investments 