How Treasury Bonds Are Quoted in 32nds and Their Yields

Treasury bonds are quoted as a percentage of their $1,000 face value, written in points and 32nds of a point rather than decimals. A quote of 99-16 means 99 and 16/32 percent of par, which works out to $995.00 per bond. That fractional convention, the bid-ask pair shown with every quote, and the accrued interest layered on at settlement are what separate the price on a screen from the cash that leaves your account.

Why Treasury Prices Use 32nds

U.S. stocks moved to decimal pricing in 2001. Treasury securities did not.¹ Each full “point” in a Treasury quote equals one percent of the bond’s $1,000 face value, or $10. Those points are then divided into 32nds, so the standard minimum price increment is 1/32 of a point, roughly $0.3125 per $1,000 of face value.

Institutional trading often needs finer resolution than that. Platforms commonly break the 32nd into halves (equivalent to 64ths) or quarters (equivalent to 128ths). Shorter-maturity securities like 3-year and 5-year notes tend to trade in quarter-32nds on major electronic platforms, while longer bonds trade in half-32nds.¹ Some venues go further still: the on-the-run 2-year note trades in eighths of 32nds (256ths of a point), about $0.039 per $1,000 of par.

Reading a Quote and Converting It to Dollars

Treasury quotes appear with a hyphen or a colon separating full points from 32nds. The number before the separator is points; the number after is 32nds. A few examples:

98-16 (or 98:16) means 98 points plus 16/32. That’s 98.5% of face value, or $985.00 on a $1,000 bond.
101-04 means 101 points plus 4/32. That’s 101.125% of face value, or $1,011.25.
98-16+ adds a trailing plus sign, which represents an extra 1/64 of a point. The quote equals 98 + 16/32 + 1/64, or 98.515625% of par, which is $985.16.

Some data feeds collapse the sub-32nd fraction into a trailing digit instead of a plus sign. A quote of 98-152 means 98 + 15/32 + 2/8 of a 32nd, where the final digit runs from 0 through 7 and captures movements down to 1/256 of a point.¹

To turn any quote into a dollar price, convert the fractional part to a decimal, add it to the full points, and multiply by $10. For 101-04, that’s 4 ÷ 32 = 0.125; plus 101 gives 101.125; times $10 gives $1,011.25.

Bid, Ask, and the Spread

Every Treasury quote shows two numbers. The bid is the highest price a buyer is willing to pay, and the ask (or “offer”) is the lowest price a seller will accept. The gap between them is the spread, and it is the transaction cost built into every round trip.

The Treasury market is one of the deepest fixed-income markets in the world, and spreads reflect that. They are often as narrow as 1/64 or 1/32 of a point, which on a $1,000 bond is about $0.31. Spreads widen in periods of market stress or on less actively traded maturities, and market makers earn the spread as compensation for standing ready to trade on either side.

What You Actually Pay: Clean Price vs. Dirty Price

The quoted price is the “clean price” and is not the full amount that changes hands. Treasury bonds pay a coupon every six months, and if you buy between coupon dates the seller is entitled to the interest that has built up since the last payment.² That amount is accrued interest. The clean price plus accrued interest is the “dirty price,” and the dirty price is what settles.

Accrued interest on Treasuries uses an Actual/Actual day-count: the exact number of days the seller held the bond during the current coupon period, divided by the exact number of days in that period.² A 4% coupon pays $20 every six months on a $1,000 bond. If the seller held the bond for 90 days of a 182-day period, accrued interest is 90 ÷ 182 × $20 = $9.89, and the buyer pays the clean price plus $9.89 at settlement.

Settlement is one business day after the trade under the T+1 standard that took effect for U.S. securities in May 2024.³ The full dirty price needs to be in your brokerage account by then; failing to settle can trigger penalties or account restrictions.⁴

The Yield That Travels with the Price

Price tells you what the bond costs. Yield tells you what it earns, and most Treasury quotes carry a yield alongside the price. The standard measure is yield to maturity (YTM): the annualized return if you buy at today’s price and hold until the government repays the principal. YTM reflects both the semiannual coupons and any gain or loss built into the purchase price.⁵

A bond bought below par (at a discount) has a YTM higher than its coupon rate, because you also collect the pull to par at maturity. A bond bought above par (at a premium) has a YTM lower than its coupon rate, because you give that premium back when the bond matures at face value.⁵

Price and yield move in opposite directions. When prices rise, yields fall. When prices fall, yields rise. That is why headlines about “rising yields” describe a market where bond prices are declining.

Current Yield vs. Yield to Maturity

Current yield is a simpler calculation: the annual coupon payment divided by the current market price. A bond with a $40 annual coupon trading at $980 has a current yield of $40 ÷ $980 = 4.08%. Current yield ignores any gain or loss at maturity, so it captures only the cash income part of the return. YTM is the more complete figure for comparing bonds.

Treasury Bills Are Quoted Differently

Treasury bills, which mature in a year or less, do not use the 32nds convention. They are quoted using a discount rate that expresses how far below face value the bill is sold, annualized over a 360-day year. A $1,000 26-week bill with a discount rate of 0.145% would sell for $999.27 and pay $1,000 at maturity, with the $0.73 difference acting as the interest.⁵ T-bills pay no coupon, so there is no accrued interest to layer on.

TIPS Use 32nds, but on an Adjusted Principal

Treasury Inflation-Protected Securities use the same 32nds notation as regular Treasury bonds, but the principal moves with inflation. The Treasury publishes a daily Index Ratio tied to the Consumer Price Index, and you multiply the original $1,000 par by that ratio to get the inflation-adjusted principal. At an Index Ratio of 1.01165, the adjusted principal is $1,011.65. The quoted market price in 32nds is applied to that adjusted principal, not the original $1,000.⁶ A TIPS quoted at 100-00 with that Index Ratio would cost $1,011.65 before accrued interest, not $1,000.

TIPS yields are quoted as “real yields,” meaning the return above inflation. A TIPS yielding 1.5% earns 1.5% on top of whatever inflation turns out to be. The difference between a nominal Treasury’s yield and a same-maturity TIPS real yield is the breakeven inflation rate, the market’s implied forecast of inflation over that period.⁷

1
Liberty Street Economics. How Does Tick Size Affect Treasury Market Quality?
2
eCFR. 31 CFR 306.35 – Computation of Interest
3
U.S. Securities and Exchange Commission. SEC Chair Gensler Statement on Upcoming Implementation of T+1 Settlement Cycle
4
U.S. Securities and Exchange Commission. New T+1 Settlement Cycle – What Investors Need To Know
5
TreasuryDirect. Understanding Pricing and Interest Rates
6
TreasuryDirect. TIPS/CPI Data
7
TreasuryDirect. Treasury Inflation-Protected Securities (TIPS)