Treasury securities are reimbursed at maturity at par. This means that, if the Department of the Treasury borrowed $1000, they would pay back $1000 plus interest at the maturity date of the bond. But before its maturity, this bond may very well change in value.

A bond’s value may change according to how the market values that bond’s interest rate in comparison with the current interest rate for new bonds with a maturity around the same date.

The FRED graph above shows the ratio of the market value of the outstanding federal debt to the par value of that debt. If it is higher than 1, that means that older bonds are valued more than currently issued bonds, because current interest rates are lower than the interest rates for older bonds.

At the time of this writing, the ratio is below 1 because much of the outstanding federal debt was “subscribed” at a time when interest rates were low, while now the rates are higher.

The graph features a second line in red, representing the interest rate on newly issued federal debt with a 10-year maturity. Comparing the two lines shows that, when interest rates are higher, the market value of outstanding federal debt tends to be lower. And vice versa.

How this graph was created: Search FRED for “Market value of federal debt” and take the series for privately held debt. From the “Edit Graph” panel, add the series “Federal debt held by private investors” and apply formula a/b. Open the “Add line” tab and search for “Treasury yield” and take your favorite one. Open the “Format” tab and set the legend to “right” for the second line. Adjust the sample period for when both series are available.

Suggested by Christian Zimmermann.