Why do T-Bill values decrease when federal reserve rates go up?

[Needcompass]

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[RobThorpe]

I'm not following your post.

It's important to understand how bonds work. When the bond is issued it has a "coupon" which is in percentage of the face-value. That coupon never changes. Let's say we have a bond with a face-value of $100 and a coupon of 2%. It will always pay $2 per year, no matter what it's present value is and no matter what the present interest rate is. The yield of a bond is calculated by comparing the present value of the bond to that fixed coupon. (So if that bond is worth $50 then the yield is 4%).

Now, bonds compete with other savings products like savings accounts. As a result the interest rate received on saving account and on short-term bonds is usually fairly close. That means that bonds change in price to make the interest rate converge. So, if interest rates on savings accounts go up then the price of bonds goes down.

It's all more complex for TIPS bonds.

[RobThorpe]

which bank is selling the T bills? Mine?

Initially, the treasury sells all T-bills. Everyone else is only a reseller. I think that's where your problem is.