Huddersfield, who host Warrington Wolves tonight, paid a significant fee to bring the former Newcastle Knights forward from Salford Red Devils last autumn and he has delivered.
Australian Yates, 26, is second overall in Super League’s top tacklers with 697 tackles and the only props to have made more metres are Alex Walmsley and David Fifita.
He first arrived in the UK with London Broncos in 2019 and represented the Combined Nations All Stars in their win against England in June.
Yates’s fine form has prompted speculation about a return Down Under.
But, under contract until the end of 2022, Watson revealed: “Luke is going to be with us.
“I’ve been speaking to Luke all the time. We have a great relationship. He does want to go back to the NRL at some point but he knows at this moment in time this is the best place for him.
“His performances have been outstanding. He’s really happy where he is not only on the rugby side of things but personal life.
“He’s told us he wants to be here long-term going forward. It’s good he’s getting attention from the NRL as it means he’s performing at a high level.
“But he’s speaking to (Giants managing director) Richard (Thewlis) as we speak about his contract and staying here long-term. I want him with us to help us create a legacy at Huddersfield so when he does go back everyone will look back on his time and say how good he was for this club.”
Watson worked with Yates at Salford, helping them reach the Challenge Cup final last year.
But he added: “I think he has got better.
“I think he will continue to get better as well.
“I’d be surprised if he’s not in the running for the Super League Dream Team given his performances this year.
“Luke Yates is the sort of player I sign for their professionalism, the way he is on and off the field, the way he carries and prepares himself.
“That’s what we want to build at Huddersfield. If you want somebody who typifies how you build a team and what it will look like going forward it’s around people like Luke Yates.
“At Salford, the first person we signed there was Mark Flanagan as they had that mentality to be able to drive a team but also had their individual attitude that they just wanted to win and compete no matter what.
“That’s what we needed to bring to Huddersfield and harness the professionalism of someone like Luke Yates and show the younger players how you go about things so it makes us better as a club all around.
“He’s a number one team player.”
Giants have endured a difficult and inconsistent season but Watson is under no illusion as to the positive role Yates has played for his squad.
“You only need to come and look at our group on a captain’s run morning and see the amount of work that Luke Yates does with all the young middles,” he said.
“After a training session he has the young lads around the computer and he’s educating them. He’s like an extra coach, to be fair, and it’s because of how professional he is.
“The best players make everyone else better around and Luke has certainly been doing that this year.
“It was essential we brought him here.”
Meanwhile, England winger Jermaine McGillvary, Australian back-row Chris McQueen and Samoa centre Ricky Leutele are all back from injury to try and help Giants secure a first win in three games.