I posted the Treasury’s breaking news this morning at SeekingAlpha.com. Here is the summary:
- I Bonds purchased from May to October will pay a composite rate of 0.26%.
- EE Bonds held for 20 years will still double in value and pay an effective interest rate of 3.5%.
- I Bond investors will get another shot with November’s rate reset.
I think this is pretty good news for investors in I Bonds and EE Bonds. The Treasury didn’t scale back on the terms of either bond.
Treasury Inflation-Protected Securities 
What I’d like to see the Treasury do is put the limits back up to $30k from $10k per SSN. There really is no reason now that other than via tax returns everything is electronic.
What is the rationale for limiting the bonds though in any way?
I agree $30,000 a year would actually be a very clever move by the Treasury. Because with rates this low, they get the advantage. I’m not sure I would go $30,000 a year at this fixed rate, but let’s have the option.
I know they have to have smart people working for them, but why wouldn’t they revamp these bonds, have a competitive interest rate, and rack in the money for current US government operations, which are their very point?
Given the ultra-low interest available on other guaranteed safe investments, both of these bonds remain competitive. The return is poor, and since the return is so low, I prefer I Bonds for their protection against future inflation. I’d argue that an I Bond paying 0.1%, plus inflation, is MUCH more attractive than a 10-year TIPS paying 0.2%, given the tax deferral and flexible maturity date.
I hear you, but I’d think the government would be in the market of giving a favorable rate to boost “investment” in America. Go above market rates to rack it in. Give inflation protection, AND give the citizens a extra incentive to lock up cash.
But, I’m not in this field, so I know I’m really just talking. Love these articles, tips.