In 2026, UK and US government bonds offer yields that comfortably exceed those of most European bonds. The 10-year UK Gilt yields 4.58% APR and the 10-year US Treasury Bond yields 4.29% APR, compared to 3.27% for the Spanish Bono or 2.44% for the German Bund. But there is one key factor you cannot ignore: exchange rate risk.
What are UK Gilts and US Treasuries?
UK Gilts
Gilts are sovereign bonds issued by the UK government through the UK Debt Management Office. They are the British equivalent of Spanish government bonds or German Bunds. They are considered risk-free assets denominated in GBP. The gilt market has over 300 years of history and is one of the most liquid markets in the world.
US Treasuries
Treasury Bonds are issued by the U.S. Department of the Treasury and are backed by the U.S. federal government. They are the global benchmark risk-free asset in USD and serve as an anchor for global interest rates. They are available in short-term (T-Bills: 3, 6, 12 months), medium-term (T-Notes: 2–10 years), and long-term (T-Bonds: 20–30 years) formats.
Current yields: complete comparison
| Product | Currency | APR | Term | Update |
|---|---|---|---|---|
| UK 10-Year Gilt | GBP | 4.58% | 10 years | Automatic (OECD) |
| UK 3-month Treasury Bill | GBP | 4.13% | 3 months | Automatic (OECD) |
| 10-year US Treasury Bond | USD | 4.29% | 10 years | Automatic (OECD) |
| 3-month US Treasury Bill | USD | 4.17% | 3 months | Automatic (OECD) |
| 10-Year Spanish Bond | EUR | 3.27% | 10 years | Automatic (OECD) |
| 3-month Treasury Bills | EUR | 2.03% | 3 months | Automatic (OECD) |
| 10-year German Bund | EUR | 2.44% | 10 years | Manual |
The risk you can’t ignore: currency
Here’s the catch. If you’re a European investor with expenses in euros, investing in GBP or USD means taking on exchange rate risk:
- If the pound depreciates by 5% against the euro while you hold the gilt, your real return in euros drops from 4.58% to around -0.4% (net loss).
- If the dollar appreciates by 5%, however, you would earn 4.29% + 5% = ~9.3% in euros.
The exchange rate can amplify or wipe out the bond’s return. In 2026, the euro has strengthened against the dollar following the Fed’s rate cuts; against the pound, Brexit-related volatility remains a factor.
How to hedge currency risk?
There are several options for sophisticated investors:
- Currency-hedged ETFs: Some US or UK Treasury bond ETFs offer an “EUR Hedged” class that eliminates currency risk (at a cost of ~1–2% annually in hedging fees).
- Currency forwards and futures: for large portfolios, it is possible to hedge exposure directly.
- Consciously assuming the risk: if you believe the USD will remain stable or appreciate against the EUR, unhedged exposure may be advantageous.
How to invest from Spain?
Option 1: Direct purchase via a broker
The most direct method. You need a broker that provides access to the bond market:
- Interactive Brokers: full access to Gilts and Treasuries. Low commissions. Recommended for active investors.
- DEGIRO: limited access to some government bonds via European markets.
- Treasuries via TreasuryDirect.gov: only for U.S. residents with a U.S. Social Security number. Not applicable for residents of Spain.
Option 2: Bond ETFs (more accessible)
The most practical option for most Spanish investors:
- iShares $ Treasury Bond 7-10yr UCITS ETF (IBTM): medium-term U.S. Treasury bonds, priced in EUR.
- iShares Core UK Gilts UCITS ETF (IGLT): UK gilts of all maturities, priced in GBP.
- Available through most Spanish online brokers.
Option 3: Mutual Funds
Funds specializing in Anglo-Saxon public debt, with the tax advantage of tax-free transfers in Spain. Check the offerings from your usual fund manager.
Taxation for Spanish investors
- Interest (coupons) is taxed as investment income: 19% up to €6,000, 21% up to €50,000, 23% over €50,000.
- Gains/losses from changes in bond prices or exchange rates are taxed as capital gains.
- ETFs: treated the same as stocks. Tax-free transfers (unlike mutual funds).
- Spain-UK and Spain-US double taxation treaties: generally, there is no withholding tax on sovereign bonds.
When is it worth investing in Anglo-Saxon bonds?
The yield difference is real and significant: up to 1.3 percentage points compared to Spanish bonds. It’s worth it if:
- You have a diversified portfolio and want exposure to non-EUR currencies as a geopolitical hedge.
- You believe that GBP or USD will remain stable or appreciate against the EUR.
- You use currency-hedged ETFs and accept the hedging cost (~1-2%) in exchange for eliminating risk.
- You need the benchmark rate for benchmarking other international investments.
It’s not worth it if:
- You do not understand or cannot assume exchange rate risk.
- Your time horizon is short (<3 years) — currency volatility may dominate the return.
- You are risk-averse and prefer certainty in euros → Spanish government bonds or Treasury bills.
Conclusion
UK Gilts and US Treasuries are high-credit-quality assets with yields in 2026 significantly higher than those of European government bonds. However, exchange rate risk is the determining factor for Spanish investors. If you decide to invest in them, the most practical route is through UCITS ETFs listed in euros, with or without currency hedging depending on your market outlook. For smaller amounts or for those who prefer simplicity and certainty in euros, Spanish Treasury Bills or Spanish Government Bonds remain the most accessible option.
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