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The 10-Year Treasury Bond: What Is It and Why You Should Track It

Updated on 20 Jan 2020


What is the 10-year Treasury Bond?

Like all other debt instruments, the 10-year Treasury Bond is a loan you make to the U.S. federal government. This bond is backed by the guarantee of the U.S. economy and has a maturity time period of a decade or 10 years. It is thus a highly reliable, long-term bond, with a less chance of default by the issuer. The U.S. Department of the Treasury auctions the 10-year Treasury Bond note.


What are the features of the 10-year Treasury Bond?

  • A treasury bond is a certificate represents a loan to the US federal government that matures in more than 10 years.
  • They fall under the category of the US Government debt securities like Treasury bonds, U.S. Treasury notes, Treasury securities, and government bonds.
  • They are seen as one of the safest investments as they are backed by the Government.
  • The bond prices of the Treasury Bonds and their yields follow opposite movements.
  • This means that when prices fall, the yields increase and vice versa.
  • The 10-year Treasury Bond is an economic indicator of the market status.


How does the 10–year Treasury Bond work?

The US Department of Treasury sets a fixed face value and interest rate for the bond. In cases of a contracting economy, when interest rates increase, there is a lot of demand. Investors bid at or above the face value. The yield they get is low because they will get a lower return on their investment. However, their investment is safe. Therefore, the investors accept a low yield in return for lower risk.

The reverse happens in the case of a flourishing business cycle. Other avenues of investments are open, which decreases the rates of interest and results in a fall of the value of the Treasury Bond. They are sold at a discount, but the yield is higher.


How does the 10-year Treasury Bond influence the investor?

The yields of the 10-year Treasury Bond is closely linked to the time to maturity. The longer is the Treasury bond’s maturity, the higher are the rates. This follows a normal yield curve.

As yields on the 10-year Treasury notes rise, the interest rates on 10- to 15-year loans, or10- 15-year fixed-rate mortgages also rise, impacting the general investor. A careful study of the historical rates in the past needs to be done and scrutinized before investing in Treasury bonds. The investors can easily analyze historical 10-year Treasury bond yields by using the website of the U.S. Treasury itself.


How can you buy the 10-year Treasury Bond?

The US Treasury auctions long-term bonds during four months: February, May, August and November.
Treasury products are sold to the highest bidder whether at the initial auction or on the secondary market through brokers.
You can buy a noncompetitive-bid Treasury bond through a broker, dealer, bank or online through TreasuryDirect.gov.
If you buy TreasuryDirect bonds, you can manage your transactions online. Thus, you can buy the bonds, reinvest them and maintain your account. There will not be any kind of maintenance fee charged.


What are the advantages of the 10-year Treasury Bonds?

Since the 10-year Treasury Bond is backed by the stable US Government, they form one of the safest investment products. They carry certain advantages, which are as follows:

  • The guaranteed rate of return: The investors are always guaranteed a certain rate of return on their investment. At no point in time, can the issuer of the bond I.e. the US Federal Government get into a default, so their rate of return or ROI cannot be questioned.Treasuries are indeed free of credit risk as well as any risks related to interests.
  • No loss in value: Since the US government backs the principal investment made by the investors, your money will not lose value. Therefore, the Treasury bonds are considered extremely safe investments
  • Safe for retirement: For those investors, who are looking for safe investments or if you’re looking towards retirement, they can find the Treasury bonds useful as they are typically safer than stocks.
  • Steady income flow: In addition, the 10-year Treasury Bonds can help to generate a steady stream of income through interest payments, if they are held for the total maturity time.
  • Tax exemptions: Most of the investments are prone to taxation. However, in the case of these 10-year Treasury Bonds, the investors don’t have to pay any kind of state or local income tax on the interest they receive every six months.


The 10-year Treasury Bonds are an intelligent investment as they are in safe hands and aim to provide a guaranteed rate of return if held till maturity. However, if the investor is forced to sell a Treasury Bond before its maturity date, changes in the return value occur. The bond’s price change based on market fluctuations and the investor will receive proceeds that can be more or less than their original investment if sold pre-maturely.


The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.

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