Loading the player...

What is a '10-Year Treasury Note'

The 10-year Treasury note is a debt obligation issued by the United States government with a maturity of 10 years upon initial issuance. A 10-year Treasury note pays interest at a fixed rate once every six months, and pays the face value to the holder at maturity. The U.S. government partially funds itself by issuing 10-year Treasury notes.

'10-Year Treasury Note'

The U.S. government issues three different types of debt securities to investors that are defined by the length of maturity, in order to fund its obligations: Treasury bills, Treasury notes and Treasury bonds. Treasury bills (T-bills) have the shortest maturities, as they are issued with durations only up to a year. The Treasury offers T-bills with maturities of 4, 13, 26 and 52 weeks. What makes T-bills unique in comparison to Treasury notes or Treasury bonds is that they are issued at discounts to par and pay no coupon payments. Investors are just paid the face value of the T-bills upon maturity, effectively making them zero-coupon bonds.

Treasury notes (T-notes) are offered up to 10-year terms, making the 10-year T-note the one with the longest maturity. Other lengths of maturity for T-notes are 2, 3, 5 and 7 years. The 10-year T-notes, and notes of shorter maturity, pay semi-annual coupon payments and are not zero-coupon debt instruments. The 10-year T-note is the most widely tracked government debt instrument in finance, and its yield is often used as a benchmark for other interest rates, such as mortgage rates. Treasury bonds (T-bonds), like T-notes, pay semi-annual coupon payments, but have lengths of maturity ranging from 20 to 30 years.

Investing in 10-year Treasury Notes

An advantage of investing in 10-year Treasury notes and other federal government securities is that the interest payments are exempt from state and local income taxes. However, they are still taxable at the federal level. The U.S. Treasury sells 10-year T-notes and notes of shorter maturities, as well as T-bills and bonds, directly through the TreasuryDirect website via competitive or noncompetitive bidding, with a minimum purchase of $100 and in $100 increments. They can also be purchased indirectly through a bank or broker.

Investors can choose to hold Treasury notes until maturity or sell them early in the secondary market. There is no minimum ownership term. Although the Treasury issues new T-notes of shorter maturities every month, the new 10-year T-notes are only issued in February, May, August and November (the origination months), with reopenings in the remaining months of the year. Reopenings are 10-year T-notes issued with the same maturity dates and interest rates as securities corresponding to the origination months. All T-notes are issued electronically, meaning investors do not hold actual paper reflecting the securities, similar to stocks.

RELATED TERMS
  1. Treasury Yield

    Treasury yield is the return on investment, expressed as a percentage, ...
  2. 30-Year Treasury

    The 30-Year Treasury is a U.S. Treasury debt obligation that ...
  3. Treasury Bond - T-Bond

    A treasury bond is a marketable, fixed-interest U.S. government ...
  4. Government Security

    A government security is a bond (or debt obligation) issued by ...
  5. Constant Maturity

    Constant maturity is an adjustment for equivalent maturity, used ...
  6. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
Related Articles
  1. Investing

    The 3 Largest U.S. Government ETFs (TIP, SHY)

    Learn about the benefits of U.S. government ETFs, and explore the three largest government funds available on the market as of March 2016.
  2. Investing

    How To Read A T-Bill Quote

    If you want buy and sell US Treasury bills, you need to learn to read the quotes.
  3. Investing

    Long-Term Treasury Bond ETFs Are Attracting Assets in 2016 (TLT, TLH)

    Discover five exchange-traded funds that invest in U.S. Treasury long-term bonds and experienced large year-to-date capital inflows as of March 4, 2016.
  4. Investing

    The Brexit Effect on U.S. Mortgage Rates

    The Brexit vote is expected to create a continuing investor rush to buy U.S. Treasuries as a safe-haven, resulting in lower mortgage rates for borrowers in the U.S.
  5. Investing

    MCLOX: BlackRock's Fund That Invests in Stocks & Bonds

    Learn about the BlackRock Global Allocation Fund Investor C Shares mutual fund, its portfolio makeup, and read an analysis of the fund's top five holdings.
  6. Financial Advisor

    Get This: Bonds Beat Stocks After All

    Data shows that long-term Treasury securities have actually outperformed the S&P 500 over the past 10 years.
  7. Trading

    How to Trade Options on Government Bonds

    A look at trading options on debt instruments, like U.S. Treasury bonds and other government securities.
  8. Investing

    Why America's Big Creditors Are Selling Treasuries

    Foreign investors are paring their holdings amid uncertainty about Trump’s policies
  9. Investing

    Find The Right Bond At The Right Time

    Find out which bonds you should be investing in and when you should be buying them.
RELATED FAQS
  1. What are the differences between a treasury bond and a treasury note and a treasury ...

    Understand the types of securities the government issues and learn the difference between Treasury notes, Treasury bonds ... Read Answer >>
  2. What's the difference between bills, notes and bonds?

    Treasury bills (T-Bills), notes and bonds are marketable securities that the U.S. government sells in order to pay off maturing ... Read Answer >>
  3. How are Treasury bill interest rates determined?

    Find out why interest rates for U.S. Treasury bills (T-bills) are determined at auction and how "competitive" bidders impact ... Read Answer >>
  4. What is the difference between the Daily Treasury Long-Term Rates and the Daily Treasury ...

    Find out more about the daily Treasury long-term rates, daily Treasury yield curve rates and the difference between these ... Read Answer >>
  5. Which economic factors impact treasury yields?

    Discover the economic factors that impact Treasury yields. Treasury yields are the benchmark yield for the rest of the world, ... Read Answer >>
Hot Definitions
  1. Risk Tolerance

    The degree of variability in investment returns that an individual is willing to withstand. Risk tolerance is an important ...
  2. Donchian Channels

    A moving average indicator developed by Richard Donchian. It plots the highest high and lowest low over the last period time ...
  3. Consumer Price Index - CPI

    A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, ...
  4. Moving Average - MA

    A moving average (MA) is a widely used indicator in technical analysis that helps smooth out price action by filtering out ...
  5. Stop Order

    A stop order is an order to buy or sell a security when its price increases past a particular point in order to limit losses ...
  6. Inflation

    The rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of ...
Trading Center