Do T-Bill Bid Prices Exceed the Ask?

Do T-Bill Bid Prices Exceed the Ask?

3 Min.

In general, the price an investor is willing to sell a security for, called the asking price, should be higher than the price they are ready to buy the security for, called the bidding price. This also applies to Treasury Bills (T-Bills), but due to how prices are quoted, it can sometimes seem like the asking price is lower than the bidding price. This confusion arises because T-Bills are discount bonds, and the quotes listed may actually be the yield on the bond rather than the price. By converting bid and ask yields to dollars, determine actual prices. The ask price is usually higher than bid.


In security trading, the bid price typically exceeds the ask price. This phenomenon arises from the premise that investors typically refrain from selling a security at a price lower than their intended purchase price. However, U.S. Treasury Bills present an unusual scenario, where the quoted bid/ask prices may appear inverted, suggesting a lower ask price compared to the bid. This article delves into the intricacies of this pricing anomaly and provides insights into deciphering such quotations.

T-Bill Bid/Ask Pricing Methods

T-Bill bid and ask prices can appear inverted due to multiple quoting methods. To clarify, you can convert these prices for an accurate comparison. Consider a 365-day T-bill with the quote: July 12th, bid 2.35%, ask 2.25%. Initially, the bid seems higher, but closer inspection reveals the ask is actually superior. This discrepancy arises because T-bills are discount bonds, and these percentages represent yields, not prices. A Treasury Bill, or T-Bill, is a short-term U.S. government debt obligation backed by the Treasury Department, typically maturing in one year or less.

Deciphering Pricing in T-Bill Quotes

To comprehend T-bill pricing, one can convert bid and ask discount yields into dollar amounts, revealing a bid of $97.65 and an ask of $97.75. The bid is, in fact, lower than the ask. In some cases, T-bill quotes directly display the prices, eliminating the need for conversion or calculation. Thus, the same T-bill may be quoted with a bid of 97.65 and an ask of 97.75.

In essence, if the dollar amount of the bid is lower than the ask, the bid's quoted yield percentage should be higher than the ask's quoted yield percentage. These two quote types essentially convey the same information.


In the world of finance, it is crucial to understand that the asking price of a security (the amount at which an investor is willing to sell) is usually higher than its bidding price (the value at which they are ready to buy). This principle applies even to Treasury Bills, which are discount bonds that can sometimes confuse the quoted prices. However, by converting the yields quoted for T-Bills into dollar amounts, the actual prices become clear. It then becomes evident that the asking price is generally higher than the bidding price. Knowing this is critical to navigating the complexities of T-Bill pricing.

Treasury Bill
Asking Price
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