You should be aware that risks have an impact on a treasury bond's return while investing in treasury bonds. Treasury bonds contain some risks, while being among the safest bonds on the market. Inflation and interest rate risk are the two main dangers that government bonds encounter. The bond's interest rates are impacted by inflation. For instance, if the bond's interest rate is 4 percent but inflation increases by 2 percent, the bond's interest rate will now be 2 percent. In contrast, the underlying intrinsic value of the issued bond is impacted by the interest rate risk. Its value decreases when the interest rate rises and vice versa is true.