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Contract History

A 2-year Treasury Note represents debt owed by the United States Treasury to the public. A 2-year Treasury Note is issued with a defined rate of interest, or coupon rate. The yield of a treasury note is determined during auction purchase. In a noncompetitive bid, one accepts the yield given at the auction. A competitive bid allows the buyer to specify the yield he or she is willing to accept, but the bid isn't guaranteed to be accepted.

Every year, holders of the 2-year Treasury Note receive the coupon rate from the Treasury. After ten years, the 2-year Treasury Note matures and the owner is paid the face value. The percentage of that total payment that exceeds the 2-year Treasury Note's market price, annualized, is called the yield. When the current market price for the 2-year Treasury note rises, the yield for the 2-year Treasury Note falls, and vise versa.

U.S. Treasury Bonds and shorter-dated Treasury Notes can trade in a cash secondary market, however most US Treasury Bonds and other U.S. Government securities are traded as futures contracts on the CME futures exchange. 


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