Bills, notes, bonds, and TIPS compared
| Security | Maturity | Interest | Used For |
|---|---|---|---|
| T-Bills | 4 weeks to 1 year | Sold at discount, no coupon | Cash management, money market funds |
| T-Notes | 2 to 10 years | Semi-annual coupon | Benchmark for mortgages and corporate bonds |
| T-Bonds | 20 to 30 years | Semi-annual coupon | Long-term pension and insurance portfolios |
| TIPS | 5, 10, or 30 years | Inflation-adjusted principal | Inflation protection |
The 10-year yield: finance's most important number
The 10-year Treasury yield is the single most important number in finance. It sets the discount rate for stocks, the base rate for mortgages, and the benchmark for corporate borrowing costs.
Compare the 10-year and 2-year Treasury yields
Check the yield curve in the Markets view. Find the current 10-year Treasury yield and compare it to the 2-year.
The risk-free rate as every asset's hurdle
Why Treasuries count as risk-free
Why are Treasury securities considered the 'risk-free' rate benchmark?
Check your understanding
Sit with the ideas.
A 10-year Treasury note has a 3.25% coupon. The last coupon paid 90 days ago, and there are 183 days between coupon dates. The clean price is 101-08 (101 + 8/32 = 101.25). What is the approximate dirty price per $100 face?
Why: