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Treasury Note: Definition, Maturity Ranges, and How to Purchase

An in-depth look at Treasury Notes, their maturity periods, fixed interest rates, and the process of purchasing them.

A Treasury Note, or T-Note, is a marketable U.S. government debt security featuring a fixed interest rate and a maturity period ranging from two to 10 years. T-Notes are a critical instrument in the U.S. government’s financial toolkit for managing public debt and funding various federal operations.

The 10-year U.S. Treasury note is the best-known point on that maturity range and is often treated as a benchmark rate for mortgages, valuation work, and macro commentary.

Fixed Interest Rate

Treasury Notes offer a fixed interest rate, also known as the coupon rate, which is paid semi-annually. This fixed rate remains unchanged over the life of the note, providing investors with predictable income streams.

Maturity Ranges

Treasury Notes have maturity periods ranging from two to 10 years. The most common maturities are:

  • 2-Year T-Notes
  • 3-Year T-Notes
  • 5-Year T-Notes
  • 7-Year T-Notes
  • 10-Year T-Notes

Marketability

Unlike some other government securities, T-Notes are marketable, meaning they can be bought and sold in the secondary market before maturity. This provides liquidity to investors who may need to access their funds before the note’s maturity date.

TreasuryDirect

Individuals can purchase Treasury Notes directly from the U.S. Department of the Treasury using TreasuryDirect, an online platform that allows for easy and direct transactions with the government.

Auction Process

Treasury Notes are sold to the public through a competitive and non-competitive bidding process during regular Treasury auctions. In a competitive bid, buyers specify the yield they are willing to accept, while in a non-competitive bid, buyers accept whatever yield is determined at the auction.

Secondary Market

Investors can also purchase T-Notes on the secondary market through brokers and financial institutions. The pricing on the secondary market can fluctuate based on various factors, including changes in interest rates and economic conditions.

Example of a Treasury Note Investment

An investor purchases a 5-year Treasury Note with a face value of $10,000 and a 2.5% annual coupon rate. The investor will receive semi-annual interest payments of $125 ($10,000 x 2.5% / 2) for five years, and at maturity, the investor will be repaid the principal amount of $10,000.

Applicability in Investment Portfolios

Treasury Notes are often included in diversified investment portfolios as a stable and lower-risk component. They are considered less volatile compared to equities and provide a reliable income stream, making them attractive during uncertain economic times.

Treasury Bills (T-Bills)

Treasury Bills are short-term securities with maturities of one year or less. Unlike T-Notes, T-Bills are sold at a discount and do not pay interest before maturity.

Treasury Bonds (T-Bonds)

Treasury Bonds have longer maturity periods, typically 20 to 30 years, and also offer fixed interest rates with semi-annual payments. They are typically used by investors looking for long-term, stable income.

  • Coupon Rate: The annual interest rate paid on a bond or note.
  • Yield: The earnings generated and realized on an investment over a particular period, expressed as a percentage.
  • Secondary Market: A marketplace for buying and selling securities that have already been issued.
  • Federal Reserve: The central banking system of the United States, which influences monetary policy and interest rates.

FAQs

What are the risks associated with Treasury Notes?

While T-Notes are considered low-risk, they are subject to interest rate risk, where rising interest rates can reduce the market value of the notes. Additionally, there is reinvestment risk if interest rates fall and investors need to find comparable investments.

Can non-U.S. residents invest in Treasury Notes?

Yes, non-U.S. residents can purchase Treasury Notes through TreasuryDirect or authorized brokers.

How are Treasury Note interest payments taxed?

Interest earned on Treasury Notes is subject to federal income tax but is exempt from state and local taxes.
Revised on Monday, May 18, 2026