I Bond dilemma: Buy in April or just keep waiting?

Posted on April 12, 2026 by Tipswatch

I am buying in April. A lot of you will disagree. There is no wrong answer.

By David Enna, Tipswatch.com

Let’s take a moment to ponder what happened in March: The United States went to war in the Mideast, gas prices surged higher, the stock market fell into chaos (briefly) and U.S. inflation took a huge leap higher.

Way down on our list of concerns was: What’s going to happen to Series I Savings Bonds at the May 1 rate reset? On February 27, I would have confidently told you:

  • The variable rate was going to fall to about 2.0% from the current 3.12%.
  • The fixed rate was going to fall to 0.8% from the current 0.9%.
  • And the composite rate would fall (for I Bonds purchased from May to October) to about 2.81%, down from the current 4.03%.

Wrong. Wrong. Wrong.

But before we get into that, let’s look at …

I Bond basics

I Bonds are U.S. government savings bonds designed to protect your savings from inflation. They offer a combination of interest rates that adjust for inflation, making them a popular choice for conservative investors.

  • The fixed rate of an I Bond will never change. Purchases through April 30, 2026, will have a fixed rate of 0.90%, which means the return will exceed official U.S. inflation by 0.9% until the I Bond is redeemed or matures in 30 years. The fixed rate will reset on May 1.
  • The inflation-adjusted rate (often called the I Bond’s variable rate) changes each six months to reflect the running rate of inflation. That rate is currently 3.12%, annualized, for six months. It will adjust again on May 1, 2026, rolling into effect for all I Bonds, no matter when they were purchased.
  • The current composite rate is 4.03% annualized for six months for purchases through April 2026.

I Bonds are an extremely safe and conservative investment. Interest accrues monthly and principal can never decline, even in times of deflation. Investments are limited to $10,000 per person per calendar year for electronic I Bonds held at TreasuryDirect. There is also a “gift box” strategy some investors use to stack purchases for future years.

I Bonds have many positives. For example, earnings are free of state income taxes and federal taxes can be deferred until the I Bond is redeemed or matures. Also, I Bonds are a simple investment to buy and track, much simpler than a TIPS with a constantly changing market value and inflation accruals that update daily.

The variable rate

This is set in stone: Because of March’s lofty inflation, the I Bond’s inflation-adjusted variable rate will rise from the current 3.12% to a new rate of 3.34%. This is based on non-seasonally adjusted inflation for the months of October 2025 to March 2026, an increase of 1.67%. The I Bond’s rate-setting formula doubles the six-month inflation rate to create the new variable rate.

View historical data on my Inflation and I Bonds page.

All I Bonds, no matter when they were issued, will eventually get the variable rate of 3.34% for six months, with the starting month depending on the original purchase month. From TreasuryDirect:

It’s important to remember that the new variable rate will apply to all I Bonds ever issued (no I Bonds have yet matured). A purchase in April will get that new, higher variable rate starting in October.

Conclusion: The I Bond’s variable rate will rise to 3.34% at the May 1 reset.

The fixed rate

The Treasury has no legal requirement or public formula for setting the I Bond’s fixed rate. The decision is at “the discretion of the Treasury Secretary.” However, we know Treasury tracks trends in real yields and adjusts accordingly. This forecasting formula has worked for the last decade: Take the average real yield of the 5-year TIPS over the preceding six months and apply a ratio of 0.65.

For this reset, we are interested in 5-year real yields from November 2025 to April 2026. There are only 13 market days left before the reset, so we can now get a solid projection:

The formula, which has been accurate for a decade, projects that the fixed rate will remain at the current level, 0.9%. That would be true even if the 5-year real yield — currently at 1.36% — suddenly plummeted to an average of 1.10% for the next 13 market days.

However … This projection is based on 10 years of Treasury history in setting the I Bond’s fixed rate. But the Treasury could change course at any time and we should be aware of that. President Trump’s first-term Treasury followed the formula and has continued to do so in his second term.

Conclusion. It looks highly likely that the I Bond’s fixed rate will hold at 0.90%.

Composite rate

If we assume the fixed rate holds at 0.90% and the variable rate rises to 3.34%, we are looking at a new composite rate of 4.26%, up from the current 4.03%, for I Bonds purchased from May to October 2026. This is based on the formula the Treasury uses to calculate the composite rate:

[Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]

If I did my math right, this formula results in the composite rate of 4.26%.

This same annualized composite rate, 4.26%, will apply to I Bonds purchased in April, after six months of earning the current rate of 4.03%.

So we know that an investor purchasing in April will earn 4.03% for six months and then 4.26% for six months, earning a combined rate of 4.16%. An investor purchasing any time from May to October will earn 4.26% for the first six months and then an undetermined rate for the next six months.

Conclusion. The I Bond’s composite rate will rise to 4.26% at the May 1 reset.

The buying decision

Buy now. As I noted at the top, I will buy my full allocation of I Bonds ($10,000 per person per year) later in April. With that decision, I know I will earn 4.16% over the next 12 months, while retaining the permanent 0.90% fixed rate. This is the “sure thing” decision, and I happen to have cash available to make the purchase.

If you are buying in April, I recommend setting the purchase date no later than April 28 on TreasuryDirect to make sure it gets processed ahead of the rate shift.

Buy later. Buying in May would be fine, but most investors who don’t buy in April will hold off investing until at least October 14, when the September inflation report is released and sets the next variable rate, to be reset November 1. At that point investors will also have a very good idea of the next fixed rate.

If you think the fixed rate could be rising in November, it makes sense to wait. Using our standard formula, the 5-year average real yield would need to rise to 1.47% over the next six months to boost the fixed rate to 1.0%. That isn’t unreasonable. So waiting could make sense.

One thing to consider is that the fixed rate announced in November will be available for purchases through April 2027, when the purchase cap resets. Also, realize that a 10-basis-point increase in the fixed rate amounts to $10 a year on a $10,000 investment. It’s not life changing.

Risks of buying now. The fixed rate soars higher in November and you feel miserable about your impatient purchase. (Not likely, but anything can happen.)

Risks of buying later. The biggest risk (also slim) is that the Treasury tosses out its traditional rate-setting formula and drops the I Bond’s fixed rate at the May reset. Another more possible risk, but not as important financially, is that inflation will plummet from April to September and the November variable rate is lower than the current 3.12%.

Short-term investment?

A combined composite rate of 4.16% looks attractive when you compare it to the nominal yields of a 4-week (3.67%) or 1-year (3.70%) T-bill. But remember that you have to hold an I Bond for one year and if you redeem at that point you lose the latest three months of interest.

Not worth it. If you buy late in April and then redeem in April 2027, you will lose the last three months of interest, meaning your total return would be 3.08%. You can do better buying a 1-year T-bill.

Rolling over I Bonds

If you are holding I Bonds with 0.0% fixed rates, you are currently earning a composite rate of 3.12%, and that will rise to 3.34% when the new variable rate kicks in. That’s not bad. There’s no reason to rush to sell these, but if you need to raise cash to purchase 0.90% I Bonds, redeeming and repurchasing makes sense.

I generally encourage people to continue holding I Bonds “until you need the cash.” It’s great to have these savings bonds growing tax-deferred with zero risk.

If you do a roll over, you will owe federal income taxes on the interest earned, and if your withdrawal is more than $10,000 (because of earned interest) you’ll only be able to buy $10,000 in new I Bonds in 2026. Also, time your redemption for early in the month because you earn no interest in the month of redemption.

Gift-box strategy

I don’t think there is a compelling need to “load up” on I Bonds in 2026, but that might change later in the year if the fixed rate surges higher. Although I have used it, I am not a fan of the gift-box strategy, mainly because the Treasury has made no attempt to clarify the rules and in fact has muddied the waters.

Conclusion

When should you purchase? There is no wrong answer. Buying in April or later in the year will likely generate similar financial returns. Getting an I Bond with a fixed rate of 0.90% remains attractive. This is a personal decision, but I still encourage investing in I Bonds as an inflation-adjusted, tax-deferred store of cash.

What are your investment plans? Discuss in the comments section!

• Confused by I Bonds? Read my Q&A on I Bonds

• Let’s ‘try’ to clarify how an I Bond’s interest is calculated

• Inflation and I Bonds: Track the variable rate changes

• I Bonds: Here’s a simple way to track current value

• I Bond Manifesto: How this investment can work as an emergency fund

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Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I would welcome donations. Any amount, or skip it, your choice. This is completely optional.

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Cash alternatives, Federal Reserve, I Bond, Inflation, Savings Bond, TreasuryDirect | 20 Comments

March inflation sets I Bond’s new variable rate at 3.34%

Posted on April 10, 2026 by Tipswatch

U.S. all-items inflation rose 0.9% in March to an annual rate of 3.3%.

By David Enna, Tipswatch.com

The March inflation report — a stunner, but not a surprise — showed that non-seasonally-adjusted all-items inflation rose 0.9% for the month, matching expectations after a massive surge higher in energy costs. The annual inflation rate rose to 3.3%, up from 2.4% in February.

This report is one of the most important of the year for investors in U.S. Series I Savings Bonds, because March inflation marks the end of a six-month string that will reset the I Bond’s variable rate on May 1. This is based on non-seasonally-adjusted inflation for the months of October 2025 to March 2026.

For March, the Bureau of Labor Statistics set the CPI Index at 330.213, an increase of 1.05% for the month. That resulted in an increase of 1.67% for the six-month rate-setting period, meaning the I Bond’s new inflation-adjusted variable rate will be 3.34%, up from the current 3.12%. Here are the data:

View historical data on my Inflation and I Bonds page

All I Bonds, no matter when they were issued, will eventually get the variable rate of 3.34% for six months, with the starting month depending on the original purchase month. The I Bond’s fixed rate will also be reset on May 1, but it looks likely to continue at 0.9%, meaning the new composite rate would be 4.26%, up from the current 4.03%.

An investor purchasing I Bonds in April will get a six-month annualized return of 4.03%, and then 4.26% for six months. But there is plenty of time to consider when to invest. Purchases through the end of April earn a full month of interest. I will be writing more on this “when to buy?” topic on Sunday.

What this means for TIPS

The Treasury uses non-seasonally-adjusted inflation in March to set daily inflation indexes for Treasury Inflation-Protected Securities in May. The March report means that principal balances for all TIPS will rise 1.05% in May, after rising 0.47% in February. Here are the new May Inflation Indexes for all TIPS.

The inflation report

Because of the extreme disruption to global energy markets in March, economists were expecting a dramatic surge higher in all-items inflation. The increase of 0.9% for the month met expectations.


Core inflation came in slightly below expectations for both the month and year, which could help soothe financial markets. But a jump in annual inflation from 2.4% in February to 3.3% in March is stunning. That is the highest annual inflation rate since April 2024.

And the trend could continue in April when missing housing data from October are added back into the CPI report. Because of the government shutdown, the BLS assumed zero increase in shelter costs in the month of October. That was highly unlikely. Here is the annual trend for all-items and core inflation, showing the remarkable gap in data:

In addition, in this March report the BLS said U.S. gasoline prices rose 21.2%, which indicates it did not capture the full month of price increases. The national average gas price started the month at about $3.15 and ended the month at about $4.16. That is an increase of 32% and prices have continued rising in April. This trend will continue.

Also in the March report:

  • Fuel oil prices rose a whopping 30.7% and are now up 44.2% for the year.
  • The overall energy index was up 10.9% in March, the highest increase since September 2005.
  • Food at home costs declined 0.2% and were up only 1.9% for the year. This trend could reverse as delivery costs begin to rise.
  • Shelter costs were up 0.3% and 3.0% for the year. We could see a bump higher in April as the missing October data are replaced by April survey numbers.
  • Apparel costs rose 1.0% in March after rising 1.3% in February.
  • Airline fares rose 2.7% for the month and are up 14.9% year over year.
  • New vehicle costs rose 0.1% for the month and are up only 0.5% for the year.
  • Prices of used cars and trucks fell 0.4% in March and were down 3.2% for the year.

The one bright spot in the March report is that food costs have moderated (egg prices were down 3.4%), but as I noted this progress could be stalled because of rising delivery costs caused by soaring gas prices.

What this means for interest rates

The current Federal Reserve isn’t going to budge interest rates higher or lower as the nation adapts to the inflationary shock of global gas prices. So I’d expect short-term interest rates to remain stable in the near term.

The core inflation numbers were slightly better than expected, which should help to soothe market jitters. But energy costs are a major concern. From Bloomberg’s report this morning:

The data underscore how the war in the Middle East is beginning to ripple through the US economy, worsening the affordability woes many households have faced in recent years. Americans are already experiencing higher prices at the pump, and service providers including Delta Air Lines Inc. and the US Postal Service have warned of price hikes ahead. …

“Looking ahead, we expect a similarly sized rise in headline CPI in April,” Kathy Bostjancic, the chief economist at Nationwide, said in a note after the release. “Even if a long-lasting deal to end the war is reached and the Strait of Hormuz is fully re-opened, it would take months for oil, gasoline, diesel and other commodity supplies to snap back to pre-war levels.”

The chaotic events of March reaffirm my long-standing commitment to allocating a portion of my investment portfolio to inflation protection, in the form of I Bonds and TIPS. These investments provide insurance. It’s best not to need the insurance, but comforting when you do need it.

If you are just learning about these investments, read these:

• Confused by I Bonds? Read my Q&A on I Bonds

• Confused by TIPS? Read my Q&A on TIPS

• TIPS in depth: Understand the language

—————————

Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I would welcome donations. Any amount, or skip it, your choice. This is completely optional.

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Cash alternatives, I Bond, Inflation, Investing in TIPS, TreasuryDirect | 13 Comments

A 5-year TIPS is maturing April 15. How did it do as an investment?

Posted on April 5, 2026 by Tipswatch

CUSIP 91282CCA7 had one of the ugliest TIPS auctions in history. And yet … it did well versus a nominal Treasury.

By David Enna, Tipswatch.com

Back in April 2021 I was out-of-my-mind frustrated by ultra-low real and nominal yields that offered little chance to surpass inflation. In those days, elite money market funds were yielding about 0.01% as the Federal Reserve held short-term interest rates near zero.

So I was intrigued (more out of boredom than financial sense) by the Treasury’s auction on April 22, 2021 of a new 5-year Treasury Inflation-Protected Security, CUSIP 91282CCA7. At the time, I was interested in “nibbling” into TIPS auctions after a long spell on the sidelines.

But I decided against a purchase. In my preview article for that auction I noted:

As of Friday’s market close, the Treasury was estimating the real yield to maturity of a 5-year TIPS at -1.73%, meaning an investor would be willing to receive a return that trails official U.S. inflation by 1.73% over the next five years.

Investors are going to pay a premium of about 9% above par for this TIPS, and then will receive coupon interest of 0.125% plus accruals to principal matching inflation over 5 years.

In closing, I noted that I Bonds were the superior investment:

You can purchase a U.S. Series I Savings Bond today and get a fixed rate of 0.0%, which means its real yield is 0.0% and your investment will very closely match future U.S. inflation for as long as you hold the I Bond. That is a 173-basis-point advantage over a 5-year TIPS.

At its originating auction, CUSIP 91282CCA7 got a real yield to maturity of -1.631%, which at the time was the lowest real yield at auction for any TIPS in history.

How did CUSIP 91282CCA7 do?

The February 2026 inflation report, issued March 11, closed the books on this TIPS. It will end with an inflation index of 1.24296 on the April 15 closing date. That reflects cumulative inflation of 24% over five years.

CUSIP 91282CCA7 ended up providing a nominal return of 2.715% over the next five years. At the time, a 5-year Treasury note had a nominal yield of just 0.82%, an incredibly low number. So the TIPS ended up outperforming the nominal Treasury by an annual rate of 1.89%.

Why did the TIPS outperform? When it was issued, it had an inflation breakeven rate of 2.45%, a very high number coming out of a decade of low inflation. But by April 2021 inflation had already started surging higher, with the annual rate rising from 1.2% in November 2020 to 4.2% in April 2021 — eventually reaching a high of 9.1% in June 2022.

In the five years after April 2021, inflation averaged 4.3%, well above the inflation breakeven rate of 2.45%. And that resulted in the TIPS outperforming the nominal Treasury. This result continues a six-year string of out-performance of TIPS over nominal Treasurys.

View historical data on my TIPS vs. Nominals page.

I Bonds were the winner

If you purchased an I Bond in April 2021, it had a fixed rate of 0.0%, much more attractive than the auctioned yield of -1.631% for this TIPS. By April 2026, the value of the I Bond had increased 24%, for an annual return of about 4.3% — easily exceeding the 2.7% for the TIPS or 0.8% for the nominal 5-year Treasury at the time. (Source: Eyebonds.info).

How about bond funds?

Vanguard’s Total Bond Fund (BND) has had a total annual return of 0.25% over the last five years, according to Morningstar. That poor performance was caused by the beating it took in 2022, when its annual return was -13.1%.

The iShares TIPS ETF (TIP), which holds the full range of maturities, has had a total annual return of 1.25% over the last five years, also under-performing CUSIP 91282CCA7.

Vanguard’s Short-Term TIPS ETF (VTIP) has had a total annual return of 3.46% over the last 5 years, better than CUSIP 91282CCA7’s performance. It benefits from a shorter duration and counter-acting gains from higher inflation.

There’s a lesson here

Two very important takeaways: 1) An I Bond with a fixed rate of 0.0% will be a very attractive investment any time the Federal Reserve decides to repress interest rates through quantitative easing. And 2) Even a TIPS with a negative real yield can be “relatively” attractive if the inflation breakeven rate is lower than seems likely.

Side note: I eventually did make a small purchase ($5,000 par) of CUSIP 91282CCA7 at the June 17, 2021 reopening auction when it got a real yield to maturity of -1.416%. The investment amount was $5,480 — a steep premium because of the negative yield.

This June 2021 version had a slightly better nominal return of 2.767%. The payout on April 15 will be $6,214.80, plus one final, very small coupon payment.

Notes and qualifications

My TIPS vs. Nominals chart is an estimate of performance.

Keep in mind that interest on a nominal Treasury and the TIPS coupon rate is paid out as current-year income and not reinvested. So in the case of a nominal Treasury, the interest earned could be reinvested elsewhere, which would potentially boost the gain. For certain, we don’t know what the investor could have earned precisely on an investment after re-investments.

In the case of a TIPS, the inflation adjustment compounds over time, and that will give TIPS a slight boost in return that isn’t reflected in the “average inflation” numbers presented in the chart.

• Confused by TIPS? Read my Q&A on TIPS

• TIPS in depth: Understand the language

• TIPS on the secondary market: Things to consider

• TIPS investor: Don’t over-think the threat of deflation

• Upcoming schedule of TIPS auctions

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Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I would welcome donations. Any amount, or skip it, your choice. This is completely optional.

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Cash alternatives, Federal Reserve, I Bond, Investing in TIPS, Savings Bond | 14 Comments

I Bond’s fixed rate is likely to hold at 0.90% at May 1 reset

Posted on March 29, 2026 by Tipswatch
The Series I Savings Bond currently has a six-month composite rate of 4.03%.

By David Enna, Tipswatch.com

I realize that the fixed rate of the U.S. Series I Savings Bond isn’t top of mind for many investors at the moment, given an active war in the Mideast, soaring gas prices, and sharp declines in both the stock and bond markets. But in our little inflation-watching community, it’s a big deal.

Both the I Bond’s permanent fixed rate and inflation-adjusted variable rate will be reset May 1 for purchases from May to October 2026. Before the outbreak of war on Feb. 28 it appeared likely the I Bond’s fixed rate would fall from the current 0.90% to 0.80%. And it also seemed likely the composite rate would fall well below the current 4.03% because of a decline in the variable rate.

The fixed rate is important because it is permanent for the potential 30-year life of the I Bond. It represents the I Bond’s “real yield” above inflation. March’s surge in both prices and interest rates has changed the likely result of the May 1 reset.

(For more on the basics of I Bonds and potential buying strategies, read my Jan. 25 article: “I Bond buying guide for 2026: Wait it out.”)

Although the U.S. Treasury does not reveal its formula for determining the I Bond’s fixed rate, we know Treasury tracks trends in real yields and adjusts accordingly. This forecasting formula has worked for the last decade: Take the average real yield of the 5-year TIPS over the preceding six months and apply a ratio of 0.65.

The next rate reset will come May 1, so we are interested in real yields from November 2025 to April 2026.

Real yields surged higher in March. Click on image for larger version

The before. On Feb. 27, one day before hostilities broke out, the 5-year real yield had fallen to 1.11% and looked likely to continue in a range below 1.20%, which would have dropped the I Bond’s fixed rate to 0.80% at the May 1 reset.

The after. At Friday’s close, the Treasury was estimating the 5-year real yield at 1.50%, up 39 basis points for the month, so far. The current trend — it appears — would have the 5-year real yield solidly above 1.30% in April.

Let’s look at how the equation has changed.

In this chart, the projection is calculated using a 0.65 ratio of the average daily 5-year real yield from November 1, 2025, to March 27, 2026. Using that data, the real yield average is 1.33% and results in an I Bond projection of 0.90%.

1.331515152 x 0.65 = 0.8655%. The I Bond’s fixed rate is always rounded to the tenth decimal point, so the current projection is 0.90%.

That projection holds even if the 5-year real yield drops to the 1.30% range for the 23 remaining market days until the May 1 reset. It would take a fall to an average of 1.20% for those 23 days to cause the projection to fall to 0.80%. That kind of fall is unlikely, even if the Iran hostilities are resolved quickly.

It is even more unlikely that the I Bond’s fixed rate will rise above the current 0.90%, which would require a massive move higher in real yields to balance off five months of accumulated data.

Conclusion. It looks highly likely that the I Bond’s fixed rate will hold at 0.90%.

Qualifications

This projection is based on 10 years of Treasury history in setting the I Bond’s fixed rate. But the Treasury could change course at any time and we should be aware of that. President Trump’s first-term Treasury followed the formula and has continued to do so in his second term.

What about the variable rate?

The March inflation report will be issued April 10 at 8:30 a.m. and we will get the final piece needed to know the I Bond’s inflation-adjusted variable rate, which will roll into effect for all I Bonds ever issued, depending on the original month of purchase.

Here are the data so far:

At the end of February — if we assumed moderate inflation in March — we were looking at a potential variable rate of about 2%, well below the current 3.12%.

But soaring gas prices in March — up nearly 40% for the month — are likely to trigger a dramatically higher non-seasonally adjusted inflation rate for that month. The Cleveland Fed’s Nowcasting page is projecting a rate of 0.76% for all-items inflation in March. That is a seasonally adjusted number, so the actual non-seasonally adjusted number for March could be 1.0% or higher.

Conclusion. If we get 1.0% non-seasonally adjusted inflation in March, the variable rate would soar to 3.22% and we would be looking at a composite rate of about 4.2% for six months for purchases from May to October 2026.

Is there a strategy?

Yes. The strategy remains the same as I wrote in January: “Wait it out.” We will get the March inflation number on April 10 and then we will have more than two weeks to contemplate purchasing I Bonds in April, in May, later in the year, or not at all.

If the I Bond’s fixed rate looks likely to hold at 0.9%, and the composite rate will be competitive with the current 4.03%, there will be less incentive to buy I Bonds in April. And in fact, the logical path might be to see how rates develop before the November 1 reset.

An I Bond earns the then-current composite rate for six full months before transitioning to a new variable rate. So a purchase late in May would be financially equivalent to a purchase late in October.

Although real yields are climbing (and could remain elevated) I Bonds remain an attractive inflation-adjusted investment, earning tax-deferred interest, exempt from state income taxes, and with rock-solid deflation protection.

April is going to be an interesting month. I will have more to say on this topic after we see that March inflation report.

• Confused by I Bonds? Read my Q&A on I Bonds

• Let’s ‘try’ to clarify how an I Bond’s interest is calculated

• Inflation and I Bonds: Track the variable rate changes

• I Bonds: Here’s a simple way to track current value

• I Bond Manifesto: How this investment can work as an emergency fund

—————————

Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I would welcome donations. Any amount, or skip it, your choice. This is completely optional.

PayPal link / Venmo link

—————————

Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

Posted in Cash alternatives, I Bond, Inflation, Retirement, Savings Bond, TreasuryDirect | 39 Comments

War in Iran: Sliding toward a financial crisis

Posted on March 23, 2026 by Tipswatch
AI-generated image for “investor watching lit bomb.” Perchance.org

U.S. stock and bond markets are ‘resilient,’ but how long can that last?

By David Enna, Tipswatch.com

Feeling a bit of financial panic? Can’t blame you. But let’s take a closer look.

The U.S. stock market had started a slight decline before the U.S. began bombing Iran on February 28. Since then, the Standard & Poors 500 index has suffered four straight weeks of declines, its longest losing streak since 2023, according to Barron’s.

The Nasdaq Composite has fallen in nine of the past 10 weeks, something it hasn’t done since 2022. The U.S. bond market has also been hit, with long-term yields rising to highs for the year on Friday. The 20- and 30-year Treasury bonds could break through the 5% barrier at any time.

With the price of oil topping $100 a barrel — and staying there — gasoline prices in the United States have increased to a national average of $3.94, up 34% in one month. Diesel fuel now retails at $5.25 a gallon, up 41% in one month.

These fuel prices — and the inevitable pass-through costs for delivery services, electricity, home heating, fertilizer, transportation, etc. — are going to boost U.S. inflation, possibly dramatically. If this crisis continues, the situation will be dire for the U.S. economy.

But not yet. The overall U.S. stock market has not entered a bear market (meaning a decline of 20% from the previous high) or even a correction (10% from the high). The S&P 500 is currently 6.2% below its all-time high of 6,932, reached on Dec. 24, 2025.

In this chart, note that the best performer over the last month has been Bitcoin, but ignore that. It was down 16.89% over the last year and is a highly speculative investment. Same for the gold ETF, GLD, the worst performer over the last month but up 47.24% over the last year. I don’t focus on Bitcoin or gold, but I included them here for comparison.

The more mainstream investments — the S&P 500, total stock market, total bond market, Nasdaq QQQ, S&P 500 equal weight — are all down substantially, but not enough to mark a correction, let alone a bear market. However, the total international stock market, represented by VXUS, has now entered correction territory, down 10.4% from its 52-week high.

Those of you old enough to remember a true bear market (not like the 33-day event in 2020) know that eventually fear and panic set in, causing sharp across-the-board selling. The saying goes, “Stairs up, elevator down.” The average bear market lasts 9 to 18 months. We aren’t there yet.

TIPS? Not so bad. Note that Vanguard’s short-term TIPS ETF, VTIP, has been the best performer of the mainstream holdings, eking out a meager total return of 0.36% for the month. The broader-based TIPS ETF, TIP, is down just 0.87% over the month.

If you are holding individual TIPS to maturity, the current market chaos is meaningless as long as you view the value of your holdings as par value x inflation index. As inflation rises, these holdings will increase in value. Plus, rising yields for longer-term TIPS present buying opportunities for investors still building out ladders.

Near future looks dim

There doesn’t seem to be a quick solution to the fighting in Iran, which has been steadily escalating. President Trump was threatening to strike Iran’s power plants and critical infrastructure today unless the Strait of Hormuz was opened. (FYI, I was writing this Sunday afternoon.) Iran responded that it would “completely close” the strait if its infrastructure is attacked. From the New York Times:

Ebrahim Zolfaghari, an Iranian military spokesman, vowed that his country would strike infrastructure used by Israel, the United States and American allies — including desalination plants that are a lifeline for much of the Middle East. …

Israeli officials have told the public to expect a protracted campaign.

Monday morning update

In a Truth Social post, Trump said the United States will postpone further strikes on Iranian power plants and energy infrastructure for five days following “productive” talks between Washington and Tehran. In reaction, at 7:30 a.m. the S&P 500 futures were up 2.1%. Oil prices immediately dropped by about 13%.

Iran did not immediately comment on Trump’s statement. The original Truth Social post was later pulled down (possibly because it contained a typo in the third word?) Most news organizations continued to report this update. So here we go. A moment of good news, but very confusing news. About 45 minutes later, Trump reposted the message with the typo corrected:

From the New York Times:

President Trump did not elaborate on the details of how Iran and the United States might agree to “a complete and total resolution” of their hostilities. Analysts have said it was difficult to identify a possible offramp for the conflict.

And then, within the hour, Iran news media reported that there were no current talks between the U.S. and Iran. (However, talks may be ongoing with 3rd-party Gulf states). From Bloomberg:

Iran’s semi-official Tasnim news agency is now also reporting Iran is not in talks, and there have been no talks, with Trump. It cites an unnamed senior security official. Trump’s social media statement is “psychological warfare,” Tasnim says.

A prolonged battle with Iran is going to mean 1) higher oil and gas prices extending well into the future, 2) an extended period of higher inflation in the United States, and 3) a massive increase in U.S. military spending at a time of ultra-high federal deficits. Add to that: 4) a highly unhappy voting populace in the fall mid-term elections.

Under these circumstances, the financial markets would have to abandon resiliency. We definitely could see a bear stock market, falling bond market and a true slowdown in the U.S. economy. Prediction: If we get to a situation this dire, the president will have to accept a cease-fire deal — one that keeps the current Iranian regime in power and retaining some influence over events in the Mideast.

Of course, I am not a geopolitical strategist, and this is just my opinion. I hope I am wrong.

Is there a strategy for investors?

My wife and I have a conservative asset allocation in stocks — 35% — and if we actually entered a bear market, we would probably look to add to stock holdings in funds like VTI and VXUS. But I have to admit feeling uneasy about the safety of all U.S. investments in this unpredictable long-term environment.

Your opinion is as good as mine. What are you thinking and are you making any changes in your investments in reaction?

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Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades. NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

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