After the latest round of central bank meetings, it's beginning to look like interest rates may have peaked, opening up a massive opportunity for the bond market to shine again.
Yields on US government bonds, known as Treasuries, have just hit their highest level since before the global financial crisis in 2007.
Ten-year Treasuries are now yielding 4.5 per cent and shorter-dated, two-year bonds are offering a return of more than 5 per cent.
Bond yields are unlikely to climb much higher, with the US Federal Reserve and Bank of England both holding interest rates in September, and the European Central Bank suggesting its increase would be the last in the cycle.
While markets suspect the Fed will deliver one more increase before the end of the year, we’re almost there.
Watch: US Federal Reserve chief warns of 'pain' in reducing inflation
Many investors are now asking themselves whether they need to take a risk on the stock market – and finally get a decent return from bonds.
Bonds are issued by governments and companies to fund their spending. They pay a fixed rate of interest (known as the coupon) over a set term, with a pledge to return your capital in full at maturity.
Government bonds offer more capital protection because the risk of default is virtually nil. With corporate bonds, there is a danger that the issuing company could run into financial difficulties and default.
After years of low yields, bonds now offer an interesting income opportunity, says Charu Chanana, market strategist at Saxo Bank in Singapore.
Their safe-haven nature may also help. “Uncertainty and volatility are likely to be key themes as we navigate the end of the interest rate cycle and bonds can help to hedge portfolio risk,” Ms Chanana adds.
There’s another reason why bonds are looking tempting right now.
Once issued, bonds are traded on the bond market, which means their prices can rise or fall, depending on demand.
As they pay a fixed rate of interest, they are much less attractive when interest rates are climbing, but tempting when they fall.
Accordingly, when interest rates rocketed last year, bond prices crashed.
That was a huge blow for investors, who had sought them out as a safe haven.
But here’s the exciting thing: When interest rates start to fall, presumably at some point next year, bond prices should shoot off in the opposite direction.
This means investors who buy today could be in line for some pretty meaty capital growth, on top of today’s generous yields.
While there are never any guarantees when it comes to investing, this looks like a pretty good bet.
It partly explains why the S&P 500 is now falling. Investors are wondering whether to rotate back into bonds instead.
Bonds can be advantageous when interest rates approach their peak, which is the case today, says Vijay Valecha, chief investment officer at Century Financial.
“After an era of historically low interest rates, bonds now offer much more appealing yields, with high-quality ‘investment grade’ corporate bonds offering yields of 6 per cent or 7 per cent.”
While we might see the odd hike, the era of rising interest rates looks to be coming to a close, Mr Valecha says.
“Should the economy stumble into recession, as many now suspect, interest rates will fall, increasing the value of the bonds in your possession.”
While the interest rate on an individual bond remains fixed through to maturity, its price depends on what others are willing to pay for it.
“If you buy a bond yielding, say, 6 per cent, and interest rates decline in the following year, a comparable newly issued bond might yield only 5 per cent. Since your bond still pays 6 per cent it becomes more desirable and its price will rise,” Mr Valecha says.
Investors or bond fund managers can then either hold the bond to maturity, or sell it at a higher price for a profit.
“Today's bond yields may become even more attractive if interest rates decrease in the coming years,” Mr Valecha adds.
Investors may have to be patient for a bit longer, as markets now expect interest rates to stay “higher for longer” as the Fed continues its battle against inflation.
While we wait, we can enjoy those yields, says Yves Bonzon, group chief investment officer at Swiss private bank Julius Baer. “Given higher future inflation uncertainty, bond investors seem to be demanding a higher term premium.”
Given higher future inflation uncertainty, bond investors seem to be demanding a higher term premium
Yves Bonzon,
group chief investment officer at Julius Baer.
Government bonds such as US Treasuries or UK gilts are generally considered safer, as nobody expects the Fed or Bank of England to go bust.
Emerging markets bonds are a bit riskier, but typically pay higher interest rates in return. Corporate bonds are also riskier because of the default risk, although “investment grade” bonds are lower risk, but yield less as a result.
Ms Chanana at Saxo Bank favours shorter-dated government bond exchange-traded funds with a duration of one to three years, either from the US, Europe, Germany or the UK.
“Treasury Inflation-Protected Securities, or TIPS, also remain interesting if stagflation risks rise,” she adds.
Mr Valecha recommends investing in a spread of bond funds to cover different sectors, maturities and risk levels.
Here are four funds worth considering:
SPDR Bloomberg 1-3 Month T-Bill ETF: This invests in short-term US Treasuries, renowned for their low-risk profile. The fund aims to offer a dependable income stream and safeguard your capital. Current yield: 4.09 per cent.
iShares J.P. Morgan USD Emerging Markets Bond ETF: Invests in emerging market debt but denominated in US dollars to avoid exchange rate fluctuations. Current yield: 5.09 per cent.
ProShares Investment Grade-Interest Rate Hedged: Provides exposure to investment-grade corporate bonds while seeking to mitigate interest rate risk by shorting Treasury bonds. Current yield: 4.66 per cent.
Franklin International Aggregate Bond ETF: An actively managed fund that focuses on government and corporate bonds in Europe, Asia and Latin America. Current yield: 2.93 per cent.
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Why are asylum seekers being housed in hotels?
The number of asylum applications in the UK has reached a new record high, driven by those illegally entering the country in small boats crossing the English Channel.
A total of 111,084 people applied for asylum in the UK in the year to June 2025, the highest number for any 12-month period since current records began in 2001.
Asylum seekers and their families can be housed in temporary accommodation while their claim is assessed.
The Home Office provides the accommodation, meaning asylum seekers cannot choose where they live.
When there is not enough housing, the Home Office can move people to hotels or large sites like former military bases.
UAE currency: the story behind the money in your pockets
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What is Diwali?
The Hindu festival is at once a celebration of the autumn harvest and the triumph of good over evil, as outlined in the Ramayana.
According to the Sanskrit epic, penned by the sage Valmiki, Diwali marks the time that the exiled king Rama – a mortal with superhuman powers – returned home to the city of Ayodhya with his wife Sita and brother Lakshman, after vanquishing the 10-headed demon Ravana and conquering his kingdom of Lanka. The people of Ayodhya are believed to have lit thousands of earthen lamps to illuminate the city and to guide the royal family home.
In its current iteration, Diwali is celebrated with a puja to welcome the goodness of prosperity Lakshmi (an incarnation of Sita) into the home, which is decorated with diyas (oil lamps) or fairy lights and rangoli designs with coloured powder. Fireworks light up the sky in some parts of the word, and sweetmeats are made (or bought) by most households. It is customary to get new clothes stitched, and visit friends and family to exchange gifts and greetings.
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Under 19 Cricket World Cup, Asia Qualifier
Fixtures
Friday, April 12, Malaysia v UAE
Saturday, April 13, UAE v Nepal
Monday, April 15, UAE v Kuwait
Tuesday, April 16, UAE v Singapore
Thursday, April 18, UAE v Oman
UAE squad
Aryan Lakra (captain), Aaron Benjamin, Akasha Mohammed, Alishan Sharafu, Anand Kumar, Ansh Tandon, Ashwanth Valthapa, Karthik Meiyappan, Mohammed Faraazuddin, Rishab Mukherjee, Niel Lobo, Osama Hassan, Vritya Aravind, Wasi Shah
Fight card
Preliminaries:
Nouredine Samir (UAE) v Sheroz Kholmirzav (UZB); Lucas Porst (SWE) v Ellis Barboza (GBR); Mouhmad Amine Alharar (MAR) v Mohammed Mardi (UAE); Ibrahim Bilal (UAE) v Spyro Besiri (GRE); Aslamjan Ortikov (UZB) v Joshua Ridgwell (GBR)
Main card:
Carlos Prates (BRA) v Dmitry Valent (BLR); Bobirjon Tagiev (UZB) v Valentin Thibaut (FRA); Arthur Meyer (FRA) v Hicham Moujtahid (BEL); Ines Es Salehy (BEL) v Myriame Djedidi (FRA); Craig Coakley (IRE) v Deniz Demirkapu (TUR); Artem Avanesov (ARM) v Badreddine Attif (MAR); Abdulvosid Buranov (RUS) v Akram Hamidi (FRA)
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Aghadan Alqak (Would I Ever Find You Again)?
Would I ever find you again
You, the heaven of my love, my yearning and madness;
You, the kiss to my soul, my cheer and
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Would your lights ever break the night of my eyes again?
Would I ever find you again?
This world is volume and you're the notion,
This world is night and you're the lifetime,
This world is eyes and you're the vision,
This world is sky and you're the moon time,
Have mercy on the heart that belongs to you.
Lyrics: Al Hadi Adam; Composer: Mohammed Abdel Wahab
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Tips from the expert
Dobromir Radichkov, chief data officer at dubizzle and Bayut, offers a few tips for UAE residents looking to earn some cash from pre-loved items.
- Sellers should focus on providing high-quality used goods at attractive prices to buyers.
- It’s important to use clear and appealing photos, with catchy titles and detailed descriptions to capture the attention of prospective buyers.
- Try to advertise a realistic price to attract buyers looking for good deals, especially in the current environment where consumers are significantly more price-sensitive.
- Be creative and look around your home for valuable items that you no longer need but might be useful to others.
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Ruwais timeline
1971 Abu Dhabi National Oil Company established
1980 Ruwais Housing Complex built, located 10 kilometres away from industrial plants
1982 120,000 bpd capacity Ruwais refinery complex officially inaugurated by the founder of the UAE Sheikh Zayed
1984 Second phase of Ruwais Housing Complex built. Today the 7,000-unit complex houses some 24,000 people.
1985 The refinery is expanded with the commissioning of a 27,000 b/d hydro cracker complex
2009 Plans announced to build $1.2 billion fertilizer plant in Ruwais, producing urea
2010 Adnoc awards $10bn contracts for expansion of Ruwais refinery, to double capacity from 415,000 bpd
2014 Ruwais 261-outlet shopping mall opens
2014 Production starts at newly expanded Ruwais refinery, providing jet fuel and diesel and allowing the UAE to be self-sufficient for petrol supplies
2014 Etihad Rail begins transportation of sulphur from Shah and Habshan to Ruwais for export
2017 Aldar Academies to operate Adnoc’s schools including in Ruwais from September. Eight schools operate in total within the housing complex.
2018 Adnoc announces plans to invest $3.1 billion on upgrading its Ruwais refinery
2018 NMC Healthcare selected to manage operations of Ruwais Hospital
2018 Adnoc announces new downstream strategy at event in Abu Dhabi on May 13
Source: The National
