IBonds.info News

October and November CPI-U

2011-12-31T06:57:00.001-08:00

The CPI-U values for October and November show a slight deflationary period since the last CPI-U value for the November I Bond was released. The CPI-U value for October fell from September’s value of 226.889 to 226.421. The value fell again from October’s value to the November value of 226.230. It is far too early to tell what the value of the May I Bond will be, but with deflation or low inflation, the variable rate is sure to be low again.

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
226.889	226.421	226.230

November 2011 - May 2012 I Bond Rate

2011-11-01T07:03:00.000-07:00

The rate for a newly purchased I Bond for November 2011 through April 2012 is 3.06%.

This rate includes the CPI-U change from March through September, which increased 1.53%. The newly announced fixed rate is 0.00%. This is the same fixed rate as the previous 6 months. The resulting composite rate for a newly purchased rate is 3.06%.

http://treasurydirect.gov/news/pressroom/pressroom_comeeandi1111.htm

November 2011 I Bond rate

2011-10-20T08:31:00.001-07:00

Now that the CPI-U values for March through September have been released, we can determine what the range of possible rates will be for the November I Bond.

The CPI-U increase from 223.467 to 226.889 results in an inflation-linked rate of 1.53%. Buying an I Bond in October (before the rate change) would result in 6 months of the current 4.60% composite rate followed by 6 months of the new composite rate of 3.06%.

The new November composite rate cannot be determined exactly since the fixed rate is not known until November. We can determine the possible range of composite rates based on the inflation-linked rate of 1.53% and calculating for different values of the new fixed rate. If you are debating whether or not to buy now or in November, the current fixed rate of 0% does not lend itself to long-term investing while the 4.60% composite rate is more attractive for shorter-term investing. That said, it doesn’t seem likely the fixed rate will rise above 0% in November, either.

Theoretical Fixed Rate	Composite Rate
0.00%	3.06%
0.10%	3.16%
0.20%	3.26%
0.30%	3.36%
0.40%	3.47%
0.50%	3.57%
0.60%	3.67%
0.70%	3.77%
0.80%	3.87%
0.90%	3.97%
1.00%	4.08%
1.10%	4.18%
1.20%	4.28%
1.30%	4.38%
1.40%	4.48%

Since the current 0% fixed rate still results in a competitive 3.06% composite rate for a new I Bond, I believe the fixed rate will remain at 0% in November. The official release of the new rate will be on Tuesday, November 1, 2011.

September CPI-U Value

2011-10-20T08:17:00.001-07:00

The CPI-U value for September rose to 226.889. The September value also completes the semiannual period used in the November rate change. Based on the March to September change in CPI-U, the inflation-linked rate for the next semiannual rate change will be 1.53%.

March	April	May	June	July	Aug.	Sept.
223.467	224.906	225.964	225.722	225.922	226.545	226.889

August CPI-U Increase

2011-09-29T16:08:00.001-07:00

The CPI-U value for August increased to 226.545. The August value represents a 1.38% increase since March’s value of 223.467. With one month remaining before the November I Bond inflation-linked rate is known, it seems inflation is under control. With no increase in September and a fixed rate on 0%, an I Bond would offer a 2.76% composite rate. The full range of possible rates will be known in mid-October.

March	April	May	June	July	Aug.	Sept.
223.467	224.906	225.964	225.722	225.922	226.545

June & July CPI-U Increases

2011-09-01T17:53:00.001-07:00

The CPI-U recovered some ground lost in June by climbing to 225.922 in July. The July value is still lower than the May value, but is higher than the March value, which is what the next I Bond rate will be based on. The March to July change in CPI-U is 1.1%. Given no increase in August and September and a continued 0% fixed rate, a new I Bond composite rate would translate to 2.2%. The rate will not be known until all the semi-annual CPI-U values are known and the new fixed rate is announced November 1.

March	April	May	June	July	Aug.	Sept.
223.467	224.906	225.964	225.722	225.922

End of Paper Bonds from Institutions

2011-07-13T15:07:00.001-07:00

The US Treasury announced today that paper savings bonds will no longer be sold at financial institutions beginning January 1, 2012. Although paper bonds will no longer be available through institutions, they will still be available when purchased using your tax refund or as a replacement for reissued, lost, stolen, or destroyed paper bonds.

The move to cut paper bonds is said to save over $70 million in the first five years. All bond purchases from consumers will now be through TreasuryDirect.

There is no indication how this change will impact the current purchasing limit of $5,000 electronic and $5,000 paper bonds per year.

Treasury to End Over-the-Counter Sales of Paper U.S. Savings Bonds; Action will save $70 million over first five years

Banks will no longer sell Savings Bonds

May CPI-U

2011-06-19T08:04:00.001-07:00

The May CPI-U value rose to 225.964. The November I Bond rate will be based on the change from the March to September rate.

March	April	May	June	July	Aug.	Sept.
223.467	224.906	225.964

CPI-U.info: CPI-U value for May 2011

May 2011 I Bond Rate Released

2011-05-02T07:50:00.000-07:00

The I Bond Rate for May 2011 will be 4.60%. The new composite rate includes the previously known 2.60% CPI-U change and the newly announced 0% fixed rate.

Fixed Rate: 0.00%
CPI-U Rate: 2.60%
Variable Rate: 4.60%
Composite Rate: 4.60%

TreasuryDirect Press Release: http://www.treasurydirect.gov/news/pressroom/pressroom_comeeandi0511.htm

What will the next I Bond rate be? May 2011

2011-04-16T11:34:00.001-07:00

May I Bond Rate

The semiannual inflation change period for the May I bond is now complete, meaning we can calculate when the May 2011 rate will be based on different fixed rates.

The CPI-U change increased by 2.3% from September 2010’s value of 218.439 and March 2011’s value of 223.467. Based on this, the composite rate would be between 4.60% and 6.03%, depending on the announced fixed rate.

Theoretical Fixed Rate	Composite Rate
0.00%	4.60%
0.10%	4.70%
0.20%	4.80%
0.30%	4.91%
0.40%	5.01%
0.50%	5.11%
0.60%	5.21%
0.70%	5.32%
0.80%	5.42%
0.90%	5.52%
1.00%	5.62%
1.10%	5.62%
1.20%	5.83%
1.30%	5.93%
1.40%	6.03%

Buying an I bond before May 1st will result in a 0.74% composite rate for 6 months, and then a 4.60% for the next 6 month period beginning in October.

Since the CPI-U change alone results in a very attractive rate in today’s environment, I doubt the fixed rate will be higher in May than it is today.

March 2011 CPI-U Released

2011-04-16T11:20:00.001-07:00

The CPI-U value for March increased again to 223.467, up from February’s value of 221.309. March is also the final month in the semi-annual inflation period used for the May I Bond rate. The resulting change between September’s value of 218.439 and March’s 223.467 results in a 2.3% CPI-U increase.

The inflation linked rate of the May I Bond will be 2.3%. The fixed portion will not be known until the new composite rate is announced Monday, May 2nd.

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.439	218.711	218.803	219.179	220.223	221.309	223.467

March 2011 CPI-U details

February 2011 CPI-U Released

2011-03-20T18:02:00.001-07:00

CPI-U for February increased again to 221.309, up from January’s value of 220.223. With one month remaining before the inflation-linked portion of the May I Bond is known, the increase is already higher than it was in the previous semi-annual change used for the November I Bond rate.

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.439	218.711	218.803	219.179	220.223	221.309

CPI-U.info: CPI-U value for February 2011

January 2011 CPI-U

2011-02-20T16:17:00.001-08:00

The CPI-U value for January 2011 increased slightly to 220.223. With 2 months remaining before the May I-Bond inflation-linked rate is known, the CPI-U change has been fairly low.

May I Bond CPI-U values

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.439	218.711	218.803	219.179	220.223

CPI-U January 2011

December CPI-U

2011-01-16T07:48:00.001-08:00

The final 2010 CPI-U value has been released. At 219.179, it continues to slowly rise. From December 2009 to December 2010, CPI-U increased by 1.5%

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.439	218.711	218.803	219.179

CPI-U for December 2010

CPI-U for November released

2010-12-19T08:17:00.001-08:00

The CPI-U value for November rose ever so slightly to 218.803.

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.439	218.711	218.803

CPI-U for November 2010

November I Bond Rate Announced

2010-11-01T07:11:00.000-07:00

The I Bond rate for November 2010 through April 2011 has been announced, with a composite rate of 0.74%.

The CPI-U increase of 0.37% resulted in a variable rate of 0.74%. The fixed rate was announced to be 0.00%, meaning the variable rate and the composite rate are the same.

Fixed Rate: 0.00%
CPI-U Rate: 0.37%
Variable Rate: 0.74%
Composite Rate: 0.74%

TreasuryDirect Press Release: http://treasurydirect.gov/news/pressroom/pressroom_comeeandi1110.htm

What will the next I Bond rate be? November 2010

2010-10-19T19:21:00.001-07:00

With the inflation portion of the next bond’s rate set at .37%, we can now list out the possible composite rates based on various fixed rates. The fixed rate portion only matters for new bonds purchased between November and April 2011 as all bonds issued prior to that will retain the fixed rate they were issued with.

The current fixed rate is .20%. Buying an I Bond now would allow you to get the current 1.74% rate through to April, when it would change to 0.94%.

Theoretical Fixed Rate	Composite Rate
0.00%	0.74%
0.10%	0.84%
0.20%	0.94%
0.30%	1.04%
0.40%	1.14%
0.50%	1.24%
0.60%	1.34%
0.70%	1.44%
0.80%	1.54%
0.90%	1.64%
1.00%	1.74%
1.10%	1.84%
1.20%	1.94%
1.30%	2.04%
1.40%	2.15%

Based on the FDIC, the current average savings account rate is 0.18% while a 60 month CD averages out to 1.66%, so I Bonds remain competitive to cash accounts. (http://www.fdic.gov/regulations/resources/rates/historical/2010_10_18.html)

CPI-U for September released

2010-10-19T19:07:00.001-07:00

The CPI-U value for September was released. The new value of 218.439 is up slightly from August’s value of 218.312. More importantly, we now have the full 6 month view of CPI-U used in the November I Bond’s rate.

Based on the March value of 217.631 and September value of 218.439, we know that the inflation-linked portion of the November I Bond will be 0.37%.

March	April	May	June	July	Aug.	Sept.
217.631	218.009	218.178	217.965	218.011	218.312	218.439

August CPI-U Rate

2010-09-19T07:10:00.001-07:00

The August CPI-U value increased to 218.312 over July’s value of 218.011.

March	April	May	June	July	Aug.	Sept.
217.631	218.009	218.178	217.965	218.011	218.312

With only one month remaining for the November I Bond rate to be determined, the inflation for this period remains very low. If the calculation was based on today’s values, the CPI-U increase would be only 0.31%. If the fixed rate of 0.2% continued, the combined I Bond rate would be a mere 0.82%.

The CPI-U increased for last September through March resulted in a 0.77% CPI-U linked rate. It seems unlikely that the November rate will be higher than today’s 1.74% I Bond.

CPI-U August 2010
I Bond Rates

July CPI-U Value

2010-08-24T15:23:00.001-07:00

The CPI-U value for July rose ever so slightly from June’s value of 217.965 to 218.011.

March	April	May	June	July	Aug.	Sept.
217.631	218.009	218.178	217.965	218.011

For those of you interested in following the CPI-U, I recently launched CPI-U.info, which has all historical CPI-U values, as well as charts and statistics for each year.

June CPI-U Update

2010-07-17T07:16:00.001-07:00

The June CPI-U value dropped slightly from May’s value of 218.178 down to 217.965.

The CPI-U increase after 3 months has only been about 0.15% with only 3 months remaining before the next I Bond inflation rate can be calculated.

March	April	May	June	July	Aug.	Sept.
217.631	218.009	218.178	217.965

April and May CPI-U Values

2010-06-21T19:09:00.001-07:00

The next I Bond rate will be based on the change in CPI-U between March and September. The value rose to 218.009 in April and again in May up to 218.178.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
217.631	218.009	218.178

New I-Bond Rate for May 1, 2010: 1.74%

2010-05-03T07:26:00.000-07:00

The new I-Bond rate has been released for May 1, 2010 through October 31, 2010.

With a fixed rate of 0.20%, the new composite rate will be 1.74%.

We previously knew that the CPI-U increase of 0.77% would result in a variable rate of 1.54%. Now that the fixed rate of 0.20%, the composite rate is 1.54% + 0.20% = 1.74%.

I-Bonds that have already been issued will change to the new variable rate on the 6-month anniversary of the issue month of the bond.

What will the next i-bond rate be?

2010-04-15T18:28:00.001-07:00

With the CPI-U linked rate of .77% set for the May-October I-Bond release, it is now time to speculate what the fixed rate value could be. The fixed rate is set by an unknown method, meaning we won’t know until it is announced May 1.

The current fixed rate is 0.30%, which is the 4th consecutive sub-1% rate. With a weak economy, it would make sense that the next fixed rate will remain low to encourage people to spend rather than save, so my guess is that the next fixed rate will be in the .50%-.70% range. My last guess was for a 1.0% fixed rate, which was a full 0.70% difference from the actual 0.30% rate that was announced.

Theoretical Fixed Rate	Composite Rate
0.00%	1.54
0.10%	1.64
0.20%	1.74
0.30%	1.84
0.40%	1.94
0.50%	2.04
0.60%	2.14
0.70%	2.25
0.80%	2.35
0.90%	2.45
1.00%	2.55
1.10%	2.65
1.20%	2.75
1.30%	2.85
1.40%	2.95

With the relatively low rate of inflation over the past 6 months, it is unlikely i-bonds will break the 3.0% mark.

Next Composite Rate for Existing I-Bonds starting May 1, 2010.

2010-04-15T18:15:00.001-07:00

Given the new CPI-U linked rate of .77%, we can now determine the composite rate for currently issued I-Bonds. An I-Bond purchased before May 1 will have a fixed rate of 0.30% and will earn the current composite rate of 3.36% until October 1, when it will switch to 1.84%.

Fixed Rate	Composite Rate
0.00%	1.54%
0.10%	1.64%
0.30%	1.84%
0.70%	2.25%
1.00%	2.55%
1.10%	2.65%
1.20%	2.75%
1.30%	2.85%
1.40%	2.95%
1.60%	3.15%
2.00%	3.56%
3.00%	4.56%
3.30%	4.87%
3.40%	4.97%
3.60%	5.17%

March CPI-U and the next CPI-U based Rate

2010-04-15T18:06:00.001-07:00

The March CPI-U value increased to 217.631 and completes the range used to calculate the next variable rate, which goes into effect on May 1st.

Given the increase from September’s value of 215.969 to March’s value of 217.631, the CPI-U value increased by .76955%, which will be rounded to .77%.

Sep.	Oct.	Nov.	Dec.	Jan.	Feb	Mar.
215.969	216.177	216.330	215.949	216.687	216.741	217.631

All bonds sold May 1 through October 31 will have a CPI-U linked rate of .77% and an as yet unknown fixed rate. Currently issued I-Bonds will switch to the new rate on the 6-month anniversary of the issue date.

February CPI-U Value

2010-03-22T20:01:00.001-07:00

The CPI-U value for February increased slightly to 216.741. The CPI-U value has hovered around 216 for each of the periods so far with only one month left before the next variable rate will be known.

Sep.	Oct.	Nov.	Dec.	Jan.	Feb	Mar.
215.969	216.177	216.330	215.949	216.687	216.741

January 2010 CPI-U Value Released

2010-02-20T07:21:00.001-08:00

The January 2010 CPI-U value increased to 216.687, up from December's fall to 215.949.

There are 2 months remaining for determining the next variable rate portion of an I bond's composite rate.

CPI-U for the May I Bond rate:

Sep.	Oct.	Nov.	Dec.	Jan.	Feb	Mar.
215.969	216.177	216.330	215.949	216.687

I-Bonds and CPI-U values

December CPI-U

2010-01-19T19:05:00.001-08:00

The December CPI-U value dropped slightly to 215.949.

CPI-U for the May I Bond rate:

Sep.	Oct.	Nov.	Dec.	Jan.	Feb	Mar.
215.969	216.177	216.330	215.949

November CPI-U

2010-01-03T09:52:00.001-08:00

The CPI-U for November rose slightly to 216.330 from October's value of 216.177.

Sep.	Oct.	Nov.	Dec.	Jan.	Feb	Mar.
215.969	216.177	216.330

October CPI-U Value rises

2009-12-14T21:05:00.001-08:00

The CPI-U value for October rose to 216.177 from September's value of 215.969.

The May 2010 I-bond will use the difference in CPI-U values between September and March to determine the inflation-linked rate.

Sep.	Oct.	Nov.	Dec.	Jan.	Feb	Mar.
215.969	216.177

New I Bond Rate: 3.36%

2009-11-02T08:59:00.000-08:00

The new I Bond rate was announced today, resulting in a 3.36% composite rate for newly purchased I Bonds for November 2009 through April 2010.

The new bond rate includes the 1.53% CPI-U linked rate and the newly announced 0.30% fixed rate. This fixed rate is up from last period's 0.10%, but is still fairly low compared to past fixed rates.

I-Bonds purchased in past periods keep their fixed rate, but will adjust to the new CPI-U linked rate on the 6 month anniversary of their purchase.

What Will the Next I-Bond Rate be?

2009-10-25T18:47:00.001-07:00

Now that we know the CPI-U linked rate of the next I bond period for November 2009 to April 2010, it is only natural to start speculating what the next fixed rate will be.

The fixed rate of an I-bond is set by the Treasury Department every 6 months in an unknown way, meaning we do not know what the next fixed rate will be. The current fixed rate is 0.10% and marks the 3rd consecutive sub-one percent fixed rate.

My personal guess is that we will see a return to the 1.0% fixed rate based on recent positive behavior in the economy. That would result in a composite rate of 4.08%.

Potential Composite Rate values based on potential fixed rate values

Theoretical Fixed Rate	Composite Rate
0.00%	3.06%
0.10%	3.16%
0.20%	3.26%
0.30%	3.36%
0.40%	3.47%
0.50%	3.57%
0.60%	3.67%
0.70%	3.77%
0.80%	3.87%
0.90%	3.97%
1.00%	4.08%
1.10%	4.18%
1.20%	4.28%
1.30%	4.38%
1.40%	4.48%

I-Bonds Info

Next Composite Rate for Existing I-Bonds

2009-10-25T18:32:00.001-07:00

Given the November-April CPI-I linked rate will be 1.53%, we can now calculate the composite rate of already issued I-bonds.

Composite rates for I-bonds during the November 09 - April 10 period

Fixed Rate	Composite Rate
0.00%	3.06%
0.10%	3.16%
0.70%	3.77%
1.00%	4.08%
1.10%	4.18%
1.20%	4.28%
1.30%	4.38%
1.40%	4.48%
1.60%	4.68%
2.00%	5.09%
3.00%	6.11%
3.30%	6.41%
3.40%	6.51%
3.60%	6.72%

I-Bond Rates

September CPI-U Value Released

2009-10-15T19:38:00.001-07:00

The CPI-U value for September increased again to 215.969, finishing the CPI-U change for the next I-Bond's rate. The November I Bond will have a CPI-U linked rate of 1.53%. This means, even if the fixed rate portion of the new bond is 0%, we are still looking at a new composite I Bond rate of 3.06%. We will know the actual fixed rate on November 1.

CPI-U Values for the November I Bond rate.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240	213.856	215.693	215.351	215.834	215.969

I-Bonds and CPI-U values

August CPI-U and I-Bonds

2009-09-29T19:14:00.001-07:00

The CPI-U for August rose slightly to 215.834 over July's value of 215.351.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240	213.856	215.693	215.351	215.834

With only one month remaining for this period, we should have a positive CPI-U rate for the November I-Bond. Hopefully the 0% days will come to a close soon.

I-Bonds and CPI-U values

July CPI-U Update

2009-08-26T12:02:00.001-07:00

The CPI-U value for July decreased slightly to 215.351 from June's value of 215.693

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240	213.856	215.693	215.351

The next rate is based on the difference between Match and September, so we have 2 more periods to watch before estimating the next rate.

I Bonds

June CPI-U Update

2009-07-28T18:51:00.001-07:00

The CPI-U value for June rose again to 215.693 from May's value of 213.240.

The CPI-U for this semi-annual period used to adjust the I Bond rate has increased 1.4% so far, with 3 more monthly periods left to measure.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240	213.856	215.693

I Bonds

May CPI-U Update

2009-06-17T19:38:00.001-07:00

The CPI-U value for May increased slightly over April's value of 213.240 to 213.856. The next I-bond rate is based on changes between March and September, so we still have a ways to go before making any predictions about the rate in November.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240	213.856

I-Bonds

April CPI-U Update

2009-05-16T06:53:00.001-07:00

The April CPI-U value increased to 213.240. This marks the 4th consecutive period of inflation.

We can now begin tracking the CPI-U values for the November I bond rate, which we all hope is better than the current 0% rate.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240

The November I bond inflation-linked rate is based on the change in CPI-U between March and September, which we will know by mid-October.

I Bonds & CPI-U

Is the I Bond rate really 0%?

2009-05-02T14:20:00.000-07:00

There have been a few questions whether or not the new I Bond rate is really 0%, or if that means there is no difference in rates from last time. Unfortunately, it means the rate your I Bonds will be earning is in fact 0%. If your bond is earning 5% right now, it will be dropping to 0% in the coming months.

Existing I Bonds will adjust to the new rate some time between May and October depending on when you purchased the bond. On the first day of the bond's 6 month anniversary of purchase, the bond will drop down to earning 0% for 6 months. It is the equivalent of having cash in your pocket for 6 months.

Thinking of selling? You should remember that I Bonds MUST be held for at least one year. Additionally, there is a penalty of 3 months of interest for redeeming within 5 years. If you want to sell a bond that is less than 5 years from issue, wait until the bond is 3 months into the 0% rate. That way, when you redeem the bond, the penalty is the past three months of 0% interest, meaning you lose no value as part of the penalty.

I Bonds Rate: 0% May - November 2009

2009-05-01T07:02:00.000-07:00

The new I bond rate for May to November 2009 will be 0.0%, as expected. The fixed rate will unfortunately drop to 0.1%.

All I bonds will drop to 0% as the deflation measured this period was significant enough to offset even the highest fixed rate ever issued. I bonds adjust rates every 6 months based on the issue month, so between now and November, bonds will drop down as they reach their 6 month mark.

I Bonds Rates

March CPI-U Value Released

2009-04-15T10:00:00.000-07:00

The CPI-U value for March inched slightly higher to 212.709. This value is still well below September's 218.783, meaning that the I Bond rate change in May will track deflation rather than inflation.

The deflation was severe enough to ensure all issued I bonds will fall to 0% for the 6-month period starting in May. As a bond reaches the 6-month anniversary from its issue month, the rate will fall to zero.

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.783	216.573	212.425	210.228	211.143	212.193	212.709

February CPI-U update

2009-03-24T20:14:00.001-07:00

The CPI-U value for February increased again to 212.193. This is still well below September's value of 218, so it is virtually impossible to have a positive value for the variable portion of I bonds for the next cycle.

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.783	216.573	212.425	210.228	211.143	212.193

At this point, it is almost certain all I bonds will see a rate of 0% for the 6-month cycle starting on May 1. The deflation aspect of the formula is simply too large a negative value to produce a positive return. Since the composite rate cannot be negative, the rate will be 0%. As previously purchased bonds hit their 6-month anniversary, the rate will drop to zero. In order for a new I bond to offer a non-zero rate, the fixed rate would have to be over 6%, which is not very likely.

The highest fixed rate ever was 3.60%, so maybe we can see an adjustment to something close to that again. Even with a 0% rate for 6 months, a high fixed-rate I bond would be a good investment if held for a long period of time. The bonds with the 3.60% fixed rate were earning 9.4% in November 2005!

I Bond CPI-U Values

January CPI-U Value

2009-02-20T16:33:00.001-08:00

The CPI-U rate for January 2009 increased to 211.143. The increase over December's 210.228 marks the first period of inflation instead of deflation for this cycle, but it is still far below September's 218.783, which is when the next inflation-linked rate will be derived from.

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.783	216.573	212.425	210.228	211.143

Even if we experience significant inflation in the next month, it is unlikely the CPI-U rate will reach 218 again. This means that the inflation-linked portion of the next I bond will still most likely be negative and is likely to result in a 0% period for most, if not all, I bonds.

The CPI-U would have to reach 215 before the highest fixed rate I bonds issued (3.6% fixed) would earn a non-zero return.

I bonds and CPI-U

December CPI-I Rate

2009-01-18T16:11:00.001-08:00

The CPI-U value for December dropped again to 210.228. The two point fall is the 5th consecutive month of deflation measured by the CPI-U.

What does this mean for I Bonds in May? Even if the fixed rate of your current bonds are not enough to offset the negative rate we are likely to see from deflation, the final rate on an I bond will never go below zero. If the current deflation continues, there are no fixed rates previously issued that would offset the deflation rate. It is very possible we will see a 0% rate for May-November.

Even if there is a 0% rate, you are still better off than keeping money under the mattress. Money invested in I Bonds is keeping its value while money under the mattress is losing value.

November CPI-U Rate Released

2008-12-16T16:22:00.001-08:00

November's CPI-U rate declined again to 212.425 from October's 216.573. This marks the fourth consecutive decline from July's high of 219.964.

It is still too early to guess what the next I Bond rate may be based on the data so far, but if continued decreases in the CPI-U value continue, the inflation portion of the bond could be zero.

October CPI-U Value Released

2008-11-27T10:38:00.001-08:00

The CPI-U value for October decreased from 218.783 in September to 216.573. This deflation wipes away the high inflation over the summer and returns the value back to levels seen in May.

This is the first month to be used in the inflation-linked rate for May 2009, so it is way too early to guess the next rate.

New IBond Rate 5.64%

2008-11-03T07:47:00.000-08:00

With an increase in the fixed rate to .70%, the new I-bond rate for November to April 09 will be 5.64%.

The CPI-U increase was 2.46%, as we knew, but the increase in the fixed rate was a pleasant surprise.

Fixed Rate: 0.70%
CPI-U Rate: 2.46%
IBond Rate: 5.64%

http://www.ibonds.info/rates.html

September CPI-U released, new rate guess

2008-10-16T18:22:00.001-07:00

The CPI-U measurement dropped for the second month in a row, ending at 218.783 - down from 219.086 in August.

We now know the CPI-U change from March to September, meaning the new inflation-linked portion of November's I Bond rate is ready. With an increase in CPI-U of 2.46%, we can expect to see November's I bond rate be 4.92%. This rate assumes a 0% fixed rate for the bond, which is what the fixed rate is currently. With the economic downturn we are experiencing, the 4.92% is attractive enough without raising the fixed rate, so it is unlikely we will see movement.

If you purchase a bond now, you will receive the 4.84% rate for 6 months, then the rate will adjust to the expected 4.92% in April.

I Bond rate for November 2008

August CPI-U released

2008-09-20T09:01:00.001-07:00

August's CPI-U value of 219.086 was released, showing a slight deflation from July's 219.964.

We now have 5 of the 6 months of CPI-U data for the next I-Bond rate in November. If we assume September's change remains along the average of the previous 5 months at 3.12%, we can expect a new I-bond rate of 6.24% assuming a 0% fixed rate.

Given the craziness of the economic environment today, the results for September's CPI-U could be anything. Since the average CPI-U for the past 5 months is pretty high, it is unlikely we will see a 6.24% I-Bond, but it will still be in that area.

I-Bonds continue to be a solid investment since they will always return a positive real return on your investment, which is exciting when even a money market account can't retain value these days.

What will the November rate be?

2008-09-13T09:24:00.001-07:00

With so much anticipation of the new I-Bond rate, people are already trying to figure out what it will be with only 4 of the 6 months of CPI-U data recorded so far.

July's CPI-U of 219.964 already shows a pretty sizeable increase over March's 213.528. A 3.01% CPI-U increase already! If we assume August and September continue the average of March-July, We would see a CPI-U increase of 4.52%.

Even with a 0% fixed rate, the CPI-U increase would cause a 9.04% I-Bond rate! It is unlikely that the August and September CPI-U increases will match the average of the previous 4 months, so it is not likely we will see 9% I-Bonds in November. We will see at least 6.02%, given current numbers.

Given that the CPI-U increase is already higher than the 6 month period for the last rate adjustment, it is very unlikely that the fixed rate will move up from the 0% it is currently.

Hopefully you have some I-Bonds with a non-zero fixed rate as they will be paying quite well in the next period if this inflation trend continues.

I Bond Rate for May-Oct 2008

2008-05-01T07:38:00.000-07:00

With a fixed rate of 0.0% and an inflation component of 2.42%, the rate for a new I bond purchased May-Oct is 4.84%. With a fixed rate of 0%, these I bonds are not very attractive for a long term investment.

Bonds purchased prior to May 1, 2008 will show the new 2.42% inflation component on the bond's 6 month anniversary. You can use the calculator on the I bond rates page to find the new rate of your bond based on the fixed rate of the bond and the 2.42% CPI-U rate.

CPI-U Rate released

2008-04-16T18:11:00.001-07:00

The March CPI-U numbers were released, setting the next I bond inflation component to 2.416%. Bonds purchased in April will recieve 4.28% for 6 months, then jump up to a respectable 6.06%.

Since the inflation component is fairly high, you can almost gurantee the fixed rate of bonds sold in the next cycle will be dropped from the current 1.2%. The historical low has been 1.0% for the fixed rate, so I expect to see that.

Given a 1.0% fixed rate, a new I bond would recieve a 5.86% rate.
Given a 1.1% fixed rate, a new I bond would recieve a 5.96% rate.

The new fixed rate will be announced when the rate goes into effect for new bonds on May 1.

I Bond Rate Calculator

Purchase Limits Reduced to $5000

2007-12-04T13:10:00.001-08:00

The Treasury Department reduced the maximum amount of bonds that can be purchased for 2008 from the current $30,000 to $5,000. This applies to paper and electronic bonds, so you can still purchase up to $10,000 annually.

You can read more from the press release

Bond Rate for November - April

2007-11-01T07:19:00.000-07:00

The Fixed portion has been adjusted to 1.20% for new bonds purchased in this period. The inflation adjustment was 1.53%, meaning the variable portion of all bonds will be 3.08%.

A new bond will earn 4.28% for the first six months. Existing bonds will adjust to the new variable rate or 3.08% on the six month anniversary of the purchase date (the fixed rate portion remains the same for the life of the bond).

Series I Bonds, I Bonds, IBonds, US I Bonds, I Bond Rate

Fed cuts rates

2007-09-18T18:05:00.001-07:00

The Fed cut rates today by half a point, fueling an increase in stocks.

As for inflation, the Fed stated "Readings on core inflation have improved modestly this year. However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully."

Concerns over inflation echo statements by former Fed chief Alan Greenspan, who mentions inflation as a serious concern in the near future in his newly published book

The Age of Turbulence: Adventures in a New World

CNN Money: Read the Fed Statement

Series I Bonds, I Bonds, IBonds, US I Bonds, I Bond Rate

Thinking about selling

2007-08-05T20:30:00.001-07:00

There is a brief discussion on Morningstar's Vanguard Diehards Forum regarding selling I Bonds with a fixed rate of 1.6%. Since others may be in a similar situation, take a look.

http://socialize.morningstar.com/NewSocialize/Asp/FullConv.asp?forumId=F100000015&convSeqNumber=59901&mrr=1186347780

Series I Bonds, I Bonds, IBonds, US I Bonds, I Bond Rate

I Bond Rate for May through October

2007-05-01T08:10:00.000-07:00

The new I Bond rate for the months of May through October will be 3.74%. The fixed portion of new bonds is 1.30% and the inflation component is 2.44%.

Previously purchased bonds will adjust to the new inflation component at their 6-month anniversary.

Series I Bonds, I Bonds, IBonds, US I Bonds, I Bond Rate

Henry Paulson on ABC News

2007-03-14T15:45:00.001-07:00

Secretary of Treasury Henry Paulson was recently on ABC News. He discussed a variety of topics, including the foreign holding of US Debt Products, the importance of China, and the state of markets today.

The full interview is available as a transcript or for viewing at http://abcnews.go.com/ThisWeek/Politics/story?id=2921642&page=1

Series I Bonds, I Bonds, IBonds, US I Bonds, I Bond Rate