Have You Heard of an (Almost) Risk-Free Asset Offering Yields of Up to 5.39%?

In this article, we explore why US Treasuries may deserve a place in your portfolio, the key considerations before investing, and how you can access them through FSM Global.

• Attractive yield for USD: With benchmark US Treasury yields reaching up to 5.39% as at 29 October 2026, investors can consider locking in attractive yields through fixed-rate Treasury Notes and Bonds.
• High credit quality and portfolio diversification: Backed by US Government, Treasuries are widely regarded as high-quality government securities and may provide diversification and defensive benefits during periods of market uncertainty.
• Understand the risks before investing: Despite their strong credit standing, US Treasuries are not entirely risk-free. Investors should consider sovereign credit risk, interest rate and duration risk and currency risk.
• Convenient and cost-effective access through FSM Global: Explore a range of US Treasury securities through our Bond Selector tool and enjoy features on BSM Live such as real-time pricing, lower minimum investment nominal, limit orders and competitive transaction fees.

Following a sharp repricing in the US bond market, US Treasury yields have climbed to levels not seen in many years. Some longer-dated yields are now approaching levels last seen around the pre-Global Financial Crisis (GFC) period. As of 29 October 2026, benchmark yields stood at approximately 4.89% for 5-year Treasuries, 4.97% for 7-year Treasuries, 5.07% for 10-year Treasuries and 5.39% for 30-year Treasuries. For investors seeking attractive USD-denominated income, these elevated yields may present an opportunity to consider adding US Treasuries to their portfolios. More importantly, they offer a way to earn regular income while gaining exposure to one of the world's largest and most liquid government bond markets.

Data as of 29 October 2026.
Source: Bloomberg, iFAST Compilations.

What are US Treasuries?

US Treasuries (UST) are debt securities issued by the US Department of the Treasury to finance the US government's spending and borrowing requirements. When you purchase a US Treasury, you are effectively lending money to the US Government. In return, you receive interest payments (where applicable) and the repayment of principal upon maturity, subject to the government's ability to meet its obligations. These securities are backed by the full faith and credit of the US Government.

The US Treasury market is the world's largest and one of its most liquid sovereign bond markets, with approximately US$31 trillion of marketable Treasury securities outstanding as at September 2026. Its securities are denominated in US dollars (USD) and are widely held by institutional investors, central banks, governments and individual investors. The market also sees average daily secondary-market trading volumes of around US$1 trillion, highlighting the depth of investor participation and market liquidity.

As of October 2026, the US Government holds long-term sovereign credit ratings of AA+ from S&P, AA+ from Fitch and Aa1 from Moody's. These ratings are one notch below the highest AAA/Aaa category and continue to be widely regarded as among the highest-quality USD-denominated fixed-income securities.

Different Types of US Treasury Securities

Type	Maturity	Characteristics
Treasury Bills (T-Bills)	Up to 1 year	Zero coupon. Purchased at a discount and redeemed at face value upon maturity.
Treasury Notes	2 to 10 Years	Pay fixed interest every 6 months, with principal repaid at maturity.
Treasury Bonds	20 to 30 Years	Pay fixed interest every 6 months, with principal repaid at maturity.
Treasury STRIPS*	Varies	Zero coupon. Purchased at a discount and redeemed at face value upon maturity.
Treasury inflation-protected securities (TIPS)	5, 10 or 30 Years	Principal adjusts with inflation (CPI), with interest paid every 6 months.
Treasury floating rate notes (FRNs)	2 years	Pay interest every 3 months, with rates that fluctuate based on 13-week T-Bill rates.

*STRIPS are not directly issued by the US Treasury. Instead, they are created by separating the principal and individual interest payments of existing Treasury Notes, Bonds and TIPS. Discover more about STRIPS here: Decoding Treasury STRIPS: A new way to invest in US Treasuries

While US Treasuries come in various forms, this article focuses primarily on fixed-rate Treasury Notes and Bonds, which provide investors with regular coupon payments every six months

Why consider adding US Treasuries to your portfolio?

1. Attractive and predictable income

Fixed-rate US Treasury Notes and Bonds provide a predictable stream of income through semi-annual coupon payments. Since both the coupon payment schedule and maturity date are known upfront, investors can better plan and anticipate their future cash flows

By purchasing a US Treasury and holding it to maturity, investors can lock in the Yield-To-Maturity (YTM) at the time of purchase (provided the US Government meets its payment obligations). This provides greater certainty over the expected return, regardless of subsequent movements in interest rates.

Paid to wait: The case for slowly adding duration to your bond portfolio

2. Portfolio diversification and defensive allocation

US Treasuries are widely regarded as safe-haven assets, supported by the US Government's strong credit standing. During periods of economic uncertainty or heightened market volatility, investors may seek the relative safety of government bonds, potentially driving up demand for Treasuries and supporting their prices.

Unlike equities, which are largely influenced by corporate earnings and economic growth expectations, US Treasuries are more sensitive to changes in interest rates, inflation expectations and demand for safe-haven assets. As a result, they can offer diversification benefits and may help cushion overall portfolio volatility, particularly during periods of market stress.

However, the relationship between bonds and equities is not always negative. During periods of elevated inflation or rising interest rates, both asset classes can experience simultaneous declines.

3. Favourable Tax Treatment

For individuals who qualify as non-resident aliens for US tax purposes, interest income from qualifying US Treasury securities is generally exempt from withholding tax, subject to applicable eligibility criteria and documentation requirements. In addition, capital gains arising from the sale of US Treasury securities are generally not subject to US federal income tax for non-resident alien individuals, although certain exceptions may apply.

FSM Global investors should also consider the tax treatment in their respective countries of tax residence, as local tax obligations may differ.

What is the catch?

While US Treasuries are widely regarded as one of the highest-quality government securities, they are not entirely risk-free. Before investing, it is important to understand the key risks that could affect your investment returns.

1. Sovereign Credit Risk and Credit Rating Downgrades

Similar to corporate bonds, a sovereign bond's credit risk is ultimately linked to the issuer's ability and willingness to meet its debt obligations. Concerns over rising federal spending and a deteriorating fiscal outlook have featured in past instances where the US Government's sovereign credit rating was downgraded by major rating agencies, including S&P, Fitch and Moody's.

A credit rating downgrade can undermine investor confidence and influence the yield investors demand to hold government debt. However, it does not necessarily result in an immediate sell-off in US Treasuries. Market reactions have varied across these three events as illustrated below.

Date	Rating Agency	Credit Rating Downgrade	Change in Yield (Next Day)	Change in Yield (1 Week later)	Change in Yield (1 Month later)
5 Aug 2011	S&P	From AAA to AA+	10 Year: -18bps 30 Year: -14bps	10 Year: -34bps 30 Year: -10bps	10 Year: -56bps 30 Year: -50bps
1 Aug 2023	Fitch	From AAA to AA+	10 Year: +3bps 30 Year: +6bps	10 Year: -3bps 30 Year: +9bps	10 Year: +13bps 30 Year: +18bps
16 May 2025	Moody’s	From Aaa to Aa1	10 Year: +3bps 30 Year: +3bps	10 Year: +8bps 30 Year: +15bps	10 Year: +3bps 30 Year: +7bps

Source: Bloomberg, iFAST Compilations.

Ultimately, the market's reaction to a credit rating downgrade depends on several factors, including broader market conditions, investor sentiment, monetary policy expectations and demand for safe-haven assets.

2. Bond Prices and Yields

One of the most important concepts in bond investing is that bond prices and yields move in opposite directions. When market interest rates rise, newly issued bonds generally offer higher yields. This makes existing bonds with lower coupon rates become less attractive, causing their market prices to fall. Conversely, when market interest rates decline, existing bonds with higher coupon rates become more attractive, potentially pushing their prices higher.

Therefore, even if the US Government's creditworthiness remains unchanged, Treasury prices can fluctuate significantly due to movements in market interest rates. For investors who intend to sell their UST before maturity, these price movements could result in potential capital losses.

3. Duration / Interest Rate Sensitivity

Duration is not the same as a bond's maturity period. While maturity tells you when the principal will be repaid, duration measures how sensitive a bond's market price is to changes in interest rates. For example, a UST with a modified duration of 5 years could experience an approximate 5% decline in price if rates rise by 1%.

In a rising interest rate environment, longer-duration Treasuries are generally more sensitive to rate hikes. Investors who sell these bonds before maturity may therefore realise a capital loss.

4. Currency Risk
   For investors whose base currency is not USD, exchange rate movements can have a significant impact on their actual investment returns. For example, an investor based in Singapore who converts SGD into USD to purchase a Treasury bond will be exposed to movements in the USD/SGD exchange rate.

If the USD weakens against the SGD during the investment period, coupon payments and the eventual sale or redemption proceeds will be worth less when converted back into SGD.

As a result, even if the Treasury investment generates a positive return in USD terms, currency depreciation could erode or potentially eliminate the gains when measured in SGD

FSM Global Bond Selector Tool

We offer a wide range of US Treasury securities on our platform, including Treasury Bills, Treasury Notes, Treasury Bonds and US Treasury STRIPS, so you can have the flexibility to choose instruments and maturities that suit your investment objectives.

Our Bond Selector tool makes it easy to explore and compare available UST. Simply navigate to Bond Selector and select the "US Treasuries" preset on the left to filter and browse.

The comparison table also provides key information such as maturity dates, prices and yields. You can also customise the filters and sort the results to easily identify securities that match your investment preferences

Trading US Treasuries on BSM Live Platform

Beyond the range of securities available, our trading platform Bondsupermart Live (BSM Live) offers several features designed to make trading experience seamless, flexible and cost-effective:

• Enjoy Real-Time Transparent Pricing:
  Unlike conventional OTC bond transactions that may require matching of trades, BSM Live provides you with real-time prices and execute trades at prevailing quoted prices, subject to available volume.
  
  
• Lower Investment Nominal
  Invest in smaller investment nominal, with minimum of US$100, compared with the standard nominal of US$1,000.
  
  
• Limit Order and Good-Till-Date (GTD)
  Trading via BSM Live gives you greater control over your entry and exit price and how long your order remains active without having to constantly monitor market movements.
  
  
• Trade during Asia-Pacific business hours
  BSM Live operates from 8:30am to 5:30pm (Singapore time), you can trade this market during regular daytime hours without having to stay up late to follow US market trading hours.
  
  
• Competitive Spreads and Low Fees

As a centralised bond marketplace, BSM Live dynamically matches your orders with those from other investors, market makers and counterparties. By bringing together different market participants, this facilitates price discovery and helps support competitive bid-ask spreads. The low processing fee of just 0.10% (minimum USD 1.88) makes it more cost-effective for you to access and trade UST, even with smaller investment amounts.

How do I start?

Step 1: Before trading US securities, you will need to complete the W-8BEN Declaration under Account Settings. The process can be completed entirely online and your status will be updated instantly upon successful submission.

Step 2: Once you have completed the declaration, head over to the Bond Selector to identify the bond you wish to invest and click [BUY]

Step 3: Similar to placing a stock order, you will be prompted to select your preferred [Payment method] and key in your order details (QTY, Price, DAY/GTD) before reviewing the trade. Post-Transaction Payment (PTP) are available for all UST traded on BSM Live, this means upfront payment is not required and will be collected only if your order is successfully executed.

Step 4: Review and submit the order.

Step 5: Monitor your order status under Orderbook. Depending on the market conditions and availability of matching orders, your order may remain queue until it is filled. You can also modify or withdraw your order, where permitted as shown:

Ultimately, US Treasuries can be a useful addition to a diversified portfolio, particularly for investors seeking USD-denominated income, high credit quality and exposure to the US Government bond market.

Not sure which US Treasury is right for you? Our non-commission-based Client Investment Specialists are happy to assist.

Reach out to us at advisory@fsmglobal.sg or call +65 6557 2853.