UAE and Gulf Investors Flock to US Treasuries as Yields Hit 20-Year High

Investors in the UAE and Gulf region are increasingly turning to US Treasuries as the yield on the 10-year bond hits 5%, a level not seen since 2007. Financial experts note a strong global appetite for bonds, with Gulf investors also participating. Wael Makarem, a financial markets strategist lead at Exness, highlighted that the 5% yield offers a decent return, allowing investors to diversify across bonds, stocks, and other assets. He mentioned that riskier issuers are offering slightly higher returns, with the 10-year yield reaching 5% in the current quarter.

Ahmad Assiri, a research strategist at Pepperstone, noted that heavy inflows into US Treasuries are not significantly moving the market due to its large size and liquidity. He described Treasuries as an attractive source of income, particularly for individuals in their 30s and 40s planning their cash flows. The two-year, five-year, and 10-year yields are within about 10 basis points of each other, which he called “almost an arbitrage”.

Ross Maxwell, chief strategy officer at VT Markets, identified three main risks: geopolitical escalation in the Middle East, potential corrections in tech-led equities due to higher borrowing costs, and the impact of continued rate rises on global economic growth. He advised investors to understand their time horizons and risk appetite, and to keep some liquidity available to remain flexible in the face of these risks.

The US Federal Reserve raised interest rates in mid-September by 25 basis points, taking them to a range of 3.75% to 4% to contain inflation. Analysts urged investors to diversify and keep some cash in reserve amid uncertain global geopolitical conditions and rising oil prices.