US Treasuries at 4%: Barriers for Spanish Investors

The 4% US Bond That Spanish Investors Cannot Buy

The calculator runs hot on a napkin. Two hundred thousand dollars in a 5% US Treasury bond maturing in twenty years returns 400,000 at maturity. The plan crashes at the first form field, the Tax ID Number—an SSN or EIN—that the official website requires and which a Spanish resident simply does not have. What seemed like a three-click purchase turns into three walls: market access, tax authorities, and exchange rates.

Can you buy US Treasuries directly from Spain?

No, according to the consensus in the thread: non-resident investors do not access the primary US Treasury market and need an intermediary, fund, or ETF. The details cause confusion—videos claiming otherwise circulate but are debunked immediately—and the realistic route ends up being a broker or bank holding the securities. Andorran entities, Auriga, Bankinter, and the Frankfurt Stock Exchange appear as entry points. There is also product confusion: those seeking negotiable debt encounter the Series EE, which is not what they think. Buying the title to hold until maturity is possible. Doing so from the official page is not.

The 4% Coupon vs. Expected Inflation

The strong argument is not the 4% in the abstract, but the 4% measured against what the market believes prices will rise. The Cleveland Fed places one-year inflation expectations at 4.18%, two-year at 3.18%, and five-year at 2.52%. With a two-year bond at 4.31%, the first coupon beats expected inflation by only 0.13 points and the second by 1.13. With a ten-year bond at 4%, the coupon would remain above projected inflation for a decade if the 2.52% scenario holds.

Fees That Eat the Coupon

This is where the operation loses its shine. An Andorran bank offers the ten-year bond with 0.3% purchase fee, 0.3% sale fee, and 0.3% annual custody: translated, $3,600 per $100,000 invested over ten years, plus €200 annually for a multi-currency account and a minimum of €15 per transaction. On a 4% coupon, this is a noticeable pinch. The fund or ETF alternative reduces paperwork but adds other burdens: 0.15% fees versus 0.12% for the US version, and a fund with ISIN IE00BH65QP47 whose US exposure is 41%. The drawdown comparison is also not innocent: 6% versus 14%.

• Ten-year bond: 0.3% purchase + 0.3% sale + 0.3% annual custody
• Short-term global bond fund hedged in euros: 0.15% fee and 41% US weight

Hedge the Currency or Bet on the Euro

The exchange rate is the elephant in the room. One school argues that currency must be hedged because it is a single investment, not two; to speculate on the euro, they say, there is already the forex market. The problem is the price: hedging costs the interest rate differential between the two currencies and, with an international broker, comes out to about €458 per year for every €10,000. With that cost, it is argued, the result looks too much like buying German debt: arbitrage equalizes the two options. The other half replies that there is nothing to hedge if the euro stays near parity with the dollar, and reminds that those who converted their euros earlier became richer in their own currency without needing bonds.

Can You Sell the Bond Before Maturity?

Yes, in the secondary market, and there the price is not par value. A bond bought with a 1% yield when titles already exist at 3% is not sold at par: a discount must be given, because the buyer always compares with what the market offers today. This mechanic explains why a ten-year bond can plummet in price without the issuer missing a single payment. Holding until maturity eliminates that risk but immobilizes money for a decade.

Is It Time to Buy American Debt?

Those warning that they are buying against the trend recall the basics: if the bond pays 3% today and could pay 5%, it is better to wait, because debt is bought when rates fall and prices appreciate without waiting for maturity. Ten years, in economics, is an eternity. Opposing this, the inverted curve reading suggests that when the short end yields more than the long end, the market expects little upside for the long term. The terminal rate sits slightly below 5%, and each recession data point reinforces this idea. Underlying noise includes emergency interventions to support the pound and suspicions that this cycle will crush pension funds. There is even talk of the mother of all bubbles.

In the end, the disorienting fact is not any fee or chart. It is that the five-year inflation expectation, 2.52%, is below the 4% coupon. If that scenario holds, buying ten-year US debt and forgetting about it would be one of the few operations where you beat inflation almost risk-free. If it doesn't, the alternative is known: Italy pays close to 4%, and the problem shifts from the coupon to who signs the paper.