In September 2024, the U.S. Federal Reserve resumed interest rate cuts, making long-term U.S. Treasury bonds less attractive while short-term bonds emerged as a popular, flexible option for both offense and defense. This highlights the vital role U.S. Treasuries play in any asset allocation strategy, regardless of economic or interest rate direction.
Although U.S. interest rates have retreated from their peak, they remain in a high-yield cycle, sparking renewed interest in Treasury investments. For retail investors in Hong Kong, what are the available channels to access U.S. Treasuries, either directly or indirectly? What should you know before investing?
How to Buy U.S. Treasury Bonds? Methods and Strategies for Hongkongers
Hong Kong investors can gain exposure to U.S. Treasuries through three main methods:
1. Buying U.S. Treasury Bonds via Banks or Brokerages
Retail investors in Hong Kong can purchase U.S. Treasuries through banks or online brokerages like Interactive Brokers, Futu, or Longbridge. However, the entry threshold at traditional banks can be as high as six figures in HKD. Online brokerages often offer lower minimums—for example, Futubull allows U.S. Treasury investments starting from just US$1,000 (around HK$7,800).
2. U.S. Treasury ETFs
For investors who want exposure to U.S. bonds with higher liquidity and lower entry barriers, U.S. Treasury ETFs are a good option. They trade like stocks and are beginner-friendly—some can be bought for just a few hundred HKD. Here are examples of U.S. Treasury ETFs:
| Fee Type | Rate | Notes |
| Brokerage commission | Varies by firm | Brokers generally charge less than banks. |
| SFC transaction levy | 0.0027% of transaction | Paid to the Securities and Futures Commission. |
| HKEX trading fee | 0.005% of transaction | Paid to Hong Kong Stock Exchange. |
| Government stamp duty | 0.1% of transaction | Charged by the Hong Kong government. |
| Trading system fee | HK$0.5 per trade | Often waived by brokers. |
| CCASS settlement fee | 0.0042% of transaction | Collected by HKSCC; min/max limits to be removed by mid-2025. |
3. U.S. Treasury Bond Funds
Investing in bond funds works similarly to mutual funds. Investors can enter via banks, brokerages, or fund platforms. Like other funds, there are subscription fees, redemption charges, and management fees.
More aggressive investors usually don’t go all-in on U.S. Treasuries. Instead, they use them as a defensive part of their portfolio to reduce volatility and pair them with other bonds or growth assets for better overall returns.
If the market outlook is uncertain and you haven’t finalized your asset allocation strategy, short-term U.S. Treasuries can serve as a safe harbor—delivering steady returns without locking in your capital for too long. For example, as of 16 December, 2024, 6-month U.S. Treasuries were yielding around 4.3%, which is quite competitive. Investing through bond funds allows you to incorporate these high-yield and reliable assets into your portfolio more easily.
Besides U.S. bonds and bond funds, other defensive assets include money market funds and fixed deposits. Retail investors should consider their return expectations, risk appetite, and liquidity needs when selecting the right instruments.
📊 Want to Buy U.S. Treasury Bonds? Compare Investment Accounts First
Whether it’s direct bond purchases, ETFs, or bond funds—each investment account offers different fees, features, and entry levels.
The right account helps you invest smarter.
👉 Explore the best account for Hong Kong investors now.
What Are U.S. Treasury Bonds?
As the name suggests, U.S. Treasuries are debt instruments issued by the U.S. government to raise funds for short- and long-term fiscal needs. When investors purchase Treasuries, they are essentially lending money to the U.S. government in return for periodic interest payments and repayment of principal upon maturity. Investors can also profit by selling bonds at a premium when prices rise.
According to the U.S. Department of the Treasury, as of December 2024, the total issuance of U.S. Treasuries exceeded US$35.46 trillion. Due to persistent federal deficits, this number continues to grow. The U.S. debt-to-GDP ratio surpassed 100% as early as 2013 and reached 123% by 2024. A simple analogy: the U.S. government is like someone who constantly pays for expenses using a credit card without ever fully paying it off, causing the debt to snowball.
Despite the staggering debt levels, why are U.S. Treasuries still considered one of the world’s safest and most stable assets? The reason lies in the U.S.’s position as the world’s largest economy and military power. Markets widely believe the chance of the U.S. defaulting is extremely low. Additionally, the financial health of the U.S. federal government significantly influences global markets, making Treasuries a cornerstone of the global financial system.
This is why U.S. Treasury bonds have long been favored by investors worldwide.
Why Are U.S. Treasury Bonds Considered the World’s Most Reliable and Stable Asset?
Although the U.S. federal debt appears bottomless, U.S. Treasuries are widely regarded as one of the world’s safest and most stable assets. That’s because the United States is the world’s largest economy and military power. As such, markets view the risk of U.S. default as negligible. Moreover, the fiscal health of the U.S. government has enormous influence over global financial markets, making U.S. Treasuries a cornerstone of the global financial system. This is why they’ve long been favored by global investors.
Maturity Terms of U.S. Treasury Bonds
U.S. Treasuries come in three main types based on maturity:
| Bond Type | Term | Interest Payment Frequency |
| Treasury Bills (T-Bills) | Short-term: 1 year or less | No regular interest; sold at a discount |
| Treasury Notes (T-Notes) | Medium-term: 2 to 10 years | Semiannual interest payments |
| Treasury Bonds (T-Bonds) | Long-term: More than 10 years | Semiannual interest payments |
Yield / Return on U.S. Treasury Bonds
Bond yield, also known as the return or interest rate, represents the expected return after purchasing a Treasury. Two key metrics investors should monitor are:
- Current Yield: Calculated by dividing the annual coupon payment by the current bond price, reflecting average yearly return.
- Yield to Maturity (YTM): The expected annual return if the bond is held to maturity.
Note: The coupon rate is fixed when the bond is issued, but the market price of the bond fluctuates. When prices drop, yields rise, and vice versa.
The 10-Year Treasury Yield as an Economic Indicator
Among the various maturities, the 10-year U.S. Treasury yield is a commonly used market sentiment indicator. For example:
- If bond prices fall and yields rise, it may indicate increased investor confidence and a shift toward riskier, higher-return assets.
- If bond prices rise and yields fall, it may signal caution or a flight to safety.
Governments around the world, including China, also view U.S. Treasuries as safe-haven assets. International demand affects bond prices and yields. Maturity terms significantly influence pricing—normally, short-term bonds have lower yields than long-term bonds. However, recent Fed rate hikes aimed at curbing inflation have caused a “yield curve inversion,” where short-term yields exceed long-term yields.
U.S. Treasury Yield Snapshot (as of Dec 16, 2024)
| Term | Yield |
| 4-week | 4.313% |
| 3-month | 4.322% |
| 6-month | 4.327% |
| 1-year | 4.228% |
| 3-year | 4.212% |
| 10-year | 4.389% |
| 20-year | 4.6708% |
| 30-year | 4.601% |
Benefits of Investing In U.S. Treasury Bonds
As a conservative investment tool, U.S. Treasuries play an important role in building a stable portfolio. Here are some of their advantages:
- Safety and Reliability: Treasuries are among the safest assets globally. If the U.S. ever defaults, the global financial system would likely already be in collapse.
- Stable Returns: Compared to stocks or derivatives, U.S. Treasuries offer stable returns—ideal for “lazy” or passive investors seeking consistent income.
- High Liquidity: U.S. Treasuries are among the most actively traded bonds in the world, making it easy for investors to buy or sell.
- Risk Diversification: Treasuries have a low correlation with equities and are useful in hedging stock market risk.
- Economic Insight: U.S. bond yields are key global financial indicators. Investing in Treasuries helps retail investors stay attuned to macroeconomic trends.
Risks of Investing in U.S. Treasury Bonds
There’s no such thing as a risk-free investment. Even the famously stable Treasuries come with risks, including:
- Interest Rate Risk: When interest rates rise, the value of existing bonds falls. Selling bonds in a rising rate environment may result in capital losses.
- Policy Risk: The Federal Reserve adjusts rates based on inflation and monetary policy. These shifts impact bond prices and yields. Understanding U.S. fiscal policy is essential for bond investors.
- Currency Risk: Since the HKD is pegged to the USD, Hong Kong investors face relatively low direct currency risk. However, many locals hold assets in GBP, JPY, or EUR, so USD exchange rate fluctuations can still impact overall returns. For instance, if the USD weakens when your bond matures or is sold, reinvesting in other currencies could become more costly.
Important information:
Investment involves risks. This information is intended to be educational and is not tailored to the investment needs of any specific investor. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment or action. Past performance is no guarantee of future results. The value of investments and the income from them can go down as well as up, so you may not get back what you invest.
