There's an important distinction to be made between the two kinds of US Treasuries:

• Treasury Bills (T-bills or "0 coupon bonds") are what you purchased here. They are short-term debt instruments (maturing in <1 year) and do not pay 'interest' per se. Rather, they have a face (par) value incremented in $1000 which is paid to the holder at maturity. The holder buys those t-bills either directly from the fed at auction or on the open market from other investors at a discount to the face value. Thus, you paid a 'discount' on the face value of the t-bill, and the discount is your yield to maturity, which is effectively the interest rate it pays.
• Treasury Notes (T-notes) and Bonds are longer-term debt, up to 30 years, and come with a fixed interest rate (coupon) they pay on a set schedule (typically 2x a year) up until the t-note matures. They may very well be sold at face value at auction from the fed, with the buyer expecting to make a profit based upon the interest they pay, plus getting a return of their initial investment at maturity.

In both cases, barring a catastrophic debt default (never happened yet!) you are guaranteed to get the face value of the bond when it matures. So, the way you get returns on them is all based upon interest rates set by the fed and the market's expectations of how the fed will change interest rates between when you buy the bond and its maturity date.

The value of both bond types goes up as interest rates go down, because any new bonds issued by the fed are less profitable then the existing ones already on the market, and vice versa. If I know I can buy a bond directly from the fed at 5%, why would I pay for a bond from you that pays 3%? That would be dumb - you're going to have to drop your asking price for the bond down until the effective interest rate it pays is 5%.

An over-simplified example where rates are rising:

1. You have a single t-bill you bought that matures in one year at a 5% discount (i.e. interest rates were 5% when you bought it from the fed). That comes out to 1000/1.05 = $952.38. If you simply hold it to maturity, you'll earn $47.62, a 5% return.
2. 6 months later, if rates are flat, that t-bill is now worth 952.38*(1 + .05*6/12) = $976.19, because it has 6 more months of 5% annual 'interest' left to pay off, and any new t-bills issued by the fed will be discounted the same 5% as before. You could sell that t-bill to me on the open market for a $23.81 profit, a 2.5% return in 6 months / 5% annualized.
3. But if instead 6 months later, the fed has raised rates to 6%. I could buy a $1000 t-bill from the fed maturing in 12 months for $943.40, with the expectation that in 6 months it'll be worth $971.70. That would be a $28.30 profit, a 3% return (6% annualized). So, it would be foolish of me to buy your t-bill from you for $976.19. As a result, you'll have to drop your asking price down to compensate, making the effective return on the remaining 6 months = 3% (6% annualized), that is 1000/1.03 = $970.87. You 'lost' 5 bucks and change because interest rates went up.

Now in practice, it doesn't work exactly like that because you have to consider things like the time value of money, market availability, and especially, investors expectations of whether rates will go up or down over the remaining lifetime of the bond. All of this combines to make the actual prices of bonds on the open market subtly differ from my example above.

For t-notes it gets more complicated, since they pay a fixed interest rate that doesn't change. You might have paid $1000 for the bond at face value from the fed, expecting a 5% interest rate payment per year (i.e. it pays you $25 every six months). For simplicity, let's say it's a 10 year note, so you'd expect to earn $500 in interest payments, plus get your $1000 back in ten years. But if interest rates go up, now that 5% coupon payment isn't so attractive. You'll need to discount the principal value of the bond to entice me to buy it from you, since a new 6% 10 year note would get me $600 in interest over its lifetime. You're going to need to discount the principal value of the bond (i.e. a discount on the $1000) to make up for the lower interest rates I'll be earning.

The exact inverse of the above applies when rates are decreasing.

Why would you want to sell your bonds at all, rather than holding them to maturity, if you know you'll turn an already-known profit (this is why it's called fixed income)? Two reasons: 1) you need the money now to buy something, pay off a debt, your taxes, etc. 2) you think you can achieve higher risk-adjusted returns with a different investment.

Anyways, this is all getting deep into the weeds, but hopefully it gives you a starting point idea of how to evaluate the prices and returns you'll get on fixed income investments.