As economic uncertainty increases, investors seek safe havens to protect their assets. Among them, U.S. Treasury bonds are considered a leading global safe asset under the trust that "as long as the U.S. government doesn't go bankrupt, the principal is safe." However, even investments known for safety carry their own risks. In particular, Korean investors must consider losses due to fluctuations in U.S. Treasury yields, exchange rate movements, and inflation. This article discusses the realistic risks and profitability of U.S. Treasury investments, as well as the optimal combination with Korean portfolios.
Basic Concepts for Understanding Bond Investments
Bonds are essentially IOUs