Treasury Note [T-Note]

Treasury Notes (T-Notes) are U.S. government debt securities with fixed interest rates and maturities of 2, 3, 5, 7, and 10 years. They pay interest semi-annually at a fixed coupon rate determined at auction. For example, a $10,000 5-year note with a 3% coupon pays $150 every six months. T-Notes are auctioned monthly (2 and 5-year), quarterly (3 and 7-year), or eight times yearly (10-year). They can be purchased in $100 increments with a $100 minimum. The 10-year Treasury note is particularly important as its yield serves as a benchmark for mortgage rates and is closely watched as an economic indicator. T-Notes offer a balance between yield and safety, with moderate duration risk. They’re highly liquid in secondary markets with tight bid-ask spreads. Interest is exempt from state and local taxes but subject to federal tax. Foreign governments hold trillions in U.S. Treasury notes as reserve assets.