Bonds have regained their appeal as an income-generating asset. At the start of 2022, a six-month US Treasury bill yielded 0.22%. Today, the 10-year Treasury yields around 4.69% (August 2026), with short-dated bills offering comparable returns – a fundamental shift from the low-rate decade that preceded it.
While US residents can buy Treasuries directly through TreasuryDirect, the route is less straightforward for European and UK investors. The good news is that it remains entirely possible to invest in US Treasury bonds from Europe and the UK, through the secondary market or through ETFs.
In this article we provide a step-by-step guide on how European and UK investors can invest in US Treasury bonds, including T-bills and T-notes. We also cover the currency risk and tax considerations that apply, which matter more than most guides acknowledge.
Video summary
What are US Treasury bonds?
US Treasury bonds are debt securities issued by the United States Department of the Treasury to finance government operations and public spending. Backed by the full faith and credit of the US government, they are widely regarded as among the safest investments available.
Treasuries carry a fixed interest rate and maturities ranging from a few weeks to thirty years. They are sold at auction and can be bought by individuals, corporations, and foreign governments. Interest earned is exempt from US state and local taxes, though this exemption is of limited relevance to European and UK investors, who are taxed under their own country’s rules rather than US state law.
Treasury bonds vs Treasury notes vs Treasury bills
All three are issued by the US Treasury and differ principally in maturity:
- Treasury bills (T-bills) have the shortest maturities, typically one year or less, and are sold at a discount to face value rather than paying periodic interest. Your return is the difference between the purchase price and the face value at maturity;
- Treasury notes (T-notes) mature in 2 to 10 years and pay interest every six months;
- Treasury bonds (T-bonds) have the longest maturities, from 20 to 30 years, and also pay interest every six months.
One point worth understanding before choosing: longer maturities carry greater interest rate risk. If rates rise after you buy, the market value of a 30-year bond falls far more than that of a 6-month bill. Investors who held long-dated Treasuries through the 2022 rate-hiking cycle experienced double-digit losses despite holding what is often described as a risk-free asset. That risk only disappears if you hold to maturity.
How to buy US Treasury bonds from Europe and the UK
US citizens can invest directly through TreasuryDirect.gov. European and UK residents are not eligible to open an account there, so the practical options are buying on the secondary market or investing through bond exchange-traded funds.
Before covering the mechanics, two considerations specific to non-US investors:
- Currency risk: Treasuries are denominated in US dollars. If you are based in the eurozone or the UK, your actual return combines the bond yield with the EUR/USD or GBP/USD movement over your holding period. A 4.69% yield can easily be wiped out by a 5% move in the exchange rate, so consider whether you want that exposure or would prefer a currency-hedged ETF;
- Tax treatment: interest from Treasuries is generally not subject to US withholding tax for non-resident investors under the portfolio interest exemption, provided a valid W-8BEN is on file. However, the income remains taxable in your country of residence. UCITS bond ETFs may be treated differently again depending on where you live, so check your local rules.
Note that some brokers do not support these products. Below we focus on Interactive Brokers, eToro, and Freedom24.
Option 1: buy US Treasury bonds on the secondary market
Interactive Brokers allows you to invest in T-bills and Treasury bonds on the secondary market. Treasury markets are highly liquid with tight spreads, and IBKR charges a commission of 0.002% of face value (minimum $5) on trades.
Interactive Brokers offers access to over 1 million bonds, covering US government securities, corporate bonds, municipals, and more. The Bond Scanner tool lets you filter by maturity, yield, and coupon, and compare pricing against other venues.
Since bonds are classified as complex instruments, you will need to request bond trading permission in your IBKR account settings before placing a trade. This is a straightforward request within the account management area but does need doing in advance.
Here is an example of a US Treasury listing on IBKR’s web platform:
Option 2: Buy US Treasury Bond ETFs
When selecting a US Government Bond ETF, it’s crucial to evaluate both the risk and return it offers. Yield-to-maturity represents the anticipated return on investment if the bond is held until it matures. Duration, on the other hand, indicates the interest rate sensitivity of a particular Bond ETF.
As an eToro user, you can get exposure to some of the biggest US ETFs (through CFDs) that track T-Bills, T-Notes, and T-Bonds. We will present you with an example of each one (in the same order):
1. SPDR Bloomberg 1-3 Month T-Bill ETF (BIL):
2. iShares 1-3 Year Treasury Bond ETF (SHY):
3. iShares 20+ Year Treasury Bond ETF (TLT):
Please note that in eToro, you are investing in the above three ETFs through CFDs. If you opt for a non-leveraged position (1-on-1), you will get a very close replication to each ETF without incurring overnight fees. So, in practice, the performance should be the same between the ETFs and the CFDs tracking those ETFs.
If you are a Freedom24 user, you have the option to purchase a variety of bond ETFs, such as the iShares USD Treasury Bond 0-1yr UCITS ETF (Acc) – IE00BGSF1X88, which provides exposure to US Treasury Bonds with a duration of 0-1 years:
Freedom24 has also introduced the Bonds Showcase, a new feature that enables investments starting from just €/$1,000. It includes bonds rated B+ and above, aimed at providing investors with stable and predictable returns. Besides, Freedom24 is offering up to 20 gift shares valued at up to $800 (each).
Another option to consider is purchasing EUR or GBP-hedged US Treasury bond ETFs to mitigate currency risk (they come in various durations, such as IBTG 1-3yr, TI5G TIPS 0-5yr, CBUG 3-7yr, etc).
You can also invest in unhedged ETFs if you are willing to invest in USD and accept the currency risk: beware that if your account balance is in EUR and you invest in USD, you’ll have to convert your money, and the broker will charge you a small currency conversion fee.
Several UCITS ETFs that hold US bonds are available, with tickers traded in USD, GBP, and EUR. However, if you possess an IBKR or Freedom24 account, which enables you to convert currencies at a low cost, there is little difference between these ETFs and their USD counterparts.
Pros and cons of investing in US Treasury Bonds from Europe & the UK
Pros
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High Credit Quality: US Treasury Bonds are backed by the US government, which makes them highly creditworthy, and the possibility of default is minimal.
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Liquidity: Treasury Bonds can be easily bought and sold, with prices based on the coupon rate relative to current interest rates.
- Generally lower risk: Bonds are less risky than other products like stocks.
Cons
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Interest rate risk: As interest rates rise, the price of your bonds will fall.
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Inflation risk: the interest may not compensate for inflation.
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Currency risk: It is important to note that investing in USD bonds with non-hedged GBP or EUR-denominated funds exposes you to currency risk. This means that the fluctuation in exchange rates between USD and GBP (or EUR) could benefit or harm your investment. Holding USD-denominated assets exposes investors to currency risk (since their base currency is not the USD and needs to be converted).
- Historically lower returns: In the long run, bonds tend to perform worse than other riskier asset classes.
Bottom line
In conclusion, investing in US Treasury Bonds from Europe and the UK is a viable option for those looking for a stable investment opportunity. Using a platform like Interactive Brokers, investors can access the US Treasury market and purchase Treasury Bonds and T-Bills on the secondary market. Furthermore, purchasing a Government Bond ETF allows investors to diversify their portfolio by gaining exposure to various Treasury Bonds with varying durations.
It’s crucial to consider the risks involved, including currency risk and interest rate fluctuations. Evaluating the Yield-to-Maturity and Duration of a Government Bond ETF will assist you in determining the level of risk and potential returns associated with the investment.
Overall, investing in US Treasury Bonds can provide an excellent opportunity to diversify your portfolio, protect your capital, and achieve steady returns over time. With careful consideration of the risks involved and the variety of platforms available, investors from Europe and the UK can capitalize on this lucrative investment opportunity.
