Here’s Why The I Bond’s Fixed Rate Will Fall On May 1

Summary

  • Real yields have fallen dramatically since the Treasury’s last rate reset on November 1. The current fixed rate of 0.5% is therefore “above market.”
  • Today’s real yields justify a fixed rate of about 0.2% to 0.3%.
  • I Bond investors should always seek out the highest fixed rate, and that means buying the full 2019 allocation before May 1.

The U.S. Treasury gives no hint about how it determines the fixed rate for I Bonds. It simply announces the new rate every May 1 and November 1. It’s a mystery. But I’ve been tracking these decisions for a long time, and I believe the 0.5% fixed rate has little chance of continuing.

Read my full analysis on SeekingAlpha.com

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About Tipswatch

Author of Tipswatch.com blog, David Enna is a long-time journalist based in Charlotte, N.C. A past winner of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and was a founding editor of The Charlotte Observer's website.
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