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What Is a 10-Year Treasury Note?
Let me explain what a 10-year U.S. Treasury note really is—it's a debt security issued by the U.S. government, essentially a loan you make to them that matures in 10 years from issuance. This note pays you interest at a fixed rate every six months and returns the face value when it matures. The government uses these to fund its operations partially.
Key Takeaways
Treasury notes, or T-notes, mature in up to 10 years, making them suitable for long-term saving or investing. You don't have to hold them for the full term; sell them anytime in the secondary market if needed. This 10-year T-note is the most tracked government debt instrument out there. Remember, their prices usually move opposite to major stock indexes.
How 10-Year Treasury Notes Work
The U.S. government issues three main types of debt: Treasury bills, notes, and bonds, differentiated by maturity lengths. Treasury bills mature in a year or less, with options like four, eight, 13, 26, or 52 weeks. Notes cover one to 10 years, and bonds go beyond 10 years. Both notes and bonds pay fixed interest every six months and redeem at par value at maturity, repaying the principal. T-bills, however, are sold at a discount without coupons; your interest is the difference between purchase price and face value at maturity.
The 10-Year Note Yield As a Benchmark
This 10-year T-note is the go-to benchmark for government debt, with its yield often guiding rates on mortgages and corporate bonds—though those don't follow it exactly. Looking at history from March 2022 to April 2025, the yield trended upward with fluctuations, driven by the Federal Reserve hiking rates to fight post-COVID inflation. The Fed's rate went from 0.25%-0.50% in March 2022 to 5.25%-5.50% by July 2023, easing slightly by September 2024. Yields climbed from about 1.7% to a peak of 4.98% in October 2023, sitting at around 4.4% in April 2025. A rising yield shows economic confidence but raises borrowing costs, potentially slowing growth; a falling one signals uncertainty.
What Impacts the 10-Year Treasury Yield?
Investor confidence directly affects the yield—when the economy looks strong, people chase riskier assets, dropping demand for T-notes and pushing yields up. In uncertain times, they buy more T-notes for safety, raising prices and lowering yields. Inflation plays a big role too; high inflation erodes real returns, so yields rise to compensate, while low inflation keeps them down. Finally, Federal Reserve moves matter—rate hikes by the Fed typically increase T-note yields to match higher borrowing costs.
The Advantages of Investing in Treasury Notes
Fixed-income like these offers diversification since their returns don't track stocks. T-notes are among the safest investments, backed by the government, and their prices often move against stock trends. In recessions, central banks cut rates, making older high-coupon T-notes more valuable. Plus, coupon payments are exempt from state and local taxes, though federal taxes apply. You can hold them to maturity or sell early without any minimum term.
The Disadvantages of Investing in Treasury Notes
These are safe, but they come with trade-offs. Yields are lower than riskier options like stocks or corporate bonds, so returns might not impress. High inflation can eat into fixed payments, potentially giving negative real returns—especially on longer notes, so factor that in. If rates rise, your existing notes lose value, leading to losses if you sell before maturity.
Advantages and Disadvantages of Investing in Treasury Notes
- Advantages: Low risk because of government backing; Easy to buy and sell; Partially free from state and local taxes.
- Disadvantages: Lower yield compared with other investments; Vulnerability to inflation; Potential capital loss if sold before maturity.
How to Buy 10-Year Treasury Bonds
You can buy these through the TreasuryDirect website via competitive or non-competitive bidding, starting at $100 and in $100 increments. Banks or brokers also sell them. All T-notes are electronic now—no paper certificates except for Series I Savings Bonds bought with tax refunds. New shorter T-notes issue monthly, but 10-year ones come in February, May, August, and November, with reopenings in other months that match the original maturity and rate but adjust price for market changes. Buying from banks is possible, but watch for commissions that cut into returns.
The Bottom Line
In summary, a 10-year Treasury note pays fixed interest twice yearly and face value at maturity—it's a low-risk choice, often tax-exempt at state and local levels. If you're avoiding volatile investments, this is a solid option for you.
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