The price differential between ten-year Treasury note futures and Treasury bond futures. Realizing profits from taking a view on this spread depends on changes in the spread between mid-term and long-term interest rates.

NOB spread= T-note price – T-bond price

By playing this spread, investors take advantage of the different price sensitivities of underlying instruments to changes in interest rates. Typically, bond prices are more sensitive than note prices to changes in interest rates. Depending on interest rate views, investors either buy or sell the NOB spread.

It is also referred to simply as “notes over bonds” (since intermediate-term note prices are usually higher than long-term bond prices, the spread is termed as notes over bonds, rather than the other way around).