What is 10-Year Treasury Note

10-Year Treasury Note is simply a debt obligation issued by the United State government which allows a 10 years maturity once it is issued. In the note, the debtor is expected to pay a fixed amount every six months until the debt reaches its maturity. Once it does, the face value is paid.  

There are three different types of debt securities issued by the U.S. government: Treasury bills, Treasury Notes, and Treasury Bonds. Among these three debt securities, Treasury bills have the shortest maturity rate of one year.

The Treasury bill maturity can be broken down to four, eight, thirteen, twenty-six, and fifty-two weeks. What made T-bill very unique when compared to Treasury bonds and treasury notes is that it is paid without a coupon and issued with a discount to par.

Treasury Notes

This is issued with a maturity deadline of 10years. It operates other lengths of maturity ranging from one to seven years. Unlike Treasury bill, Treasury Note operates semiannual coupons payment. Generally, this is the most popularly tracked government debt in the finance world.

Treasury Bond

This debt security has the longest maturity deadline of 30 years. Like T-notes, debtors are required to pay semiannual coupon payments.

Benefits Of Investing In Treasury Note

The major advantage of investing in a Treasury Note is that payments of interest are excluded from both local and state income taxes, though it remains taxable at the federal level.

The department that handles these debt securities is the US Treasury. Treasury Notes and other shorter maturities in it are sold in this department. The department also handles the sales of T-Bond and T-Bills. Sales are made directly through the TreasuryDirect Website via competitive and non-competitive bidding. Sales can also be made indirectly from a broker or bank. The minimum bidding purchase is $100.

When a Treasury note is purchased, the investors can decide to keep this until its maturity or sell it at the secondary market. There is no minimum ownership term binding the investor.

Although every month, a new note of shorter maturities is issued, the new notes for the T-note of 10 years maturity are issued only in November, August, May, and February. The reopening of notes only occurs in the remaining months of the year with the same interest rates and maturity dates.

Notes: all T-note are issued electronically. This means that the investors do not possess any paper reflecting the stock.