. designation, which is the highest level of backing given on a . government security,means that the government pledges to use its full taxing and borrowing authority, as well as revenue from nontax sources, to pay the interest and repay the face amount of the security. Nonetheless, the market prices of these securities are not guaranteed and will fluctuate daily—just like the prices of any other bonds. . government backing of Treasury and agency securities applies only to the underlying securities and does not prevent share-price fluctuations. Interest paid on Treasury bonds usually is exempt from state and local income taxes, but is not exempt from federal income.
