What you're missing is that on average the market would have factored that into the price of the 1 year bond. If you look at past data there is on average no d

What you're missing is that on average the market would have factored that into the price of the 1 year bond. If you look at past data there is on average no difference between buying 1 year bonds and keeping them to maturity and buying 3 year bonds and selling after 1 year. The only case maybe for buying 1 year bonds is where you have another contract which matures in 1 year denominated in the same currency. E.g. I have a mortgage payment of $1020 that I have to make in 1 year so I should invest $1000 into a bond that pays 2% interest.