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Treasury notes and bonds (2 to 30 years)
· Asset or instrument
Fact, law or dataA rule, statute, definition or measured number.
Treasury notes (2 to 10 years) and bonds (20 and 30 years) are the government's longer-term IOUs, paying fixed interest twice a year.
See it on the Money & Finance map →How it works
Notes come in 2-, 3-, 5-, 7- and 10-year terms; bonds in 20- and 30-year terms. Each pays a fixed coupon every six months and returns its face value at maturity. They are sold at regular auctions, from $100 minimum, and then trade daily. Notes make up about half of all marketable Treasury debt; bonds about a sixth. The 30-year was suspended from late 2001 to 2006, and the 20-year returned in 2020. Interest is federally taxed but free of state and local income tax.
Why it matters
They lock in the government's borrowing cost for years, and the 10-year note's yield is the anchor for mortgage rates, cap rates and stock valuations.
Facts, rules and data
Treasury's Monthly Statement of the Public Debt lists every issue outstanding; auction results are published at TreasuryDirect. Investors can buy at auction there or via a broker, or hold Treasury ETFs.
Debates and risks
How much the Treasury should 'term out' its debt into notes and bonds, versus short bills, given large deficits and rising interest costs, is actively debated.
Connections (2)
▸Treasury notes and bonds (2 to 30 years) are the longer-term US Treasury securitiesFact, law or data
The connection
Notes (2 to 10 years) and bonds (20 and 30 years) make up about two-thirds of marketable Treasury debt. By borrowing for years at a fixed coupon, the Treasury locks in its interest cost; the mix of short and long debt decides how quickly rising rates feed into the federal budget.
When and why
Sold at regular auctions: 2-, 3-, 5- and 7-year notes monthly; new 10-, 20- and 30-year issues quarterly, reopened in the months between.
How we know
Treasury's Monthly Statement of the Public Debt breaks down outstanding debt by type; auction results list every issue.
Debates and risks
Whether investors will absorb ever more long-term debt without demanding a bigger 'term premium', the extra yield for locking money up for years.
▸The 10-year Treasury yield is set by trading in Treasury notes and bonds (2 to 30 years)Fact, law or data
The connection
The 10-year yield is simply the market yield on the most recently issued 10-year Treasury note, set moment to moment by buying and selling among dealers, funds, banks and foreign investors. The Fed does not set it. Weak demand at a 10-year auction, or worries about deficits or inflation, can push it up quickly.
When and why
In the Treasury cash and futures markets; new 10-year notes are auctioned in February, May, August and November, with reopenings in other months.
How we know
Treasury publishes a daily official yield curve; dealer quotes on the current 10-year note are public in real time.
Debates and risks
How much of the 10-year yield reflects expected Fed rates versus a 'term premium' for risk; model estimates vary widely.