Treasury Inflation-Protected Securities

• Energy prices drove overall inflation up sharply in March, giving a boost to the I Bond’s variable rate calculation.
• I Bonds purchased before May 1 will offer an overall one-year return of 2.4%, but most importantly will carry a permanent fixed rate of 0.5%.
• My advice continues to be: Buy I Bonds up to your full allocation before the fixed rate is reset on May 1.

U.S. inflation surged a bit in March, the Bureau of Labor Statistics reported today, providing the final piece of data needed to set the new inflation-adjusted variable rate for U.S. Series I Savings Bonds.

Read my full analysis on SeekingAlpha.com

Also, I have updated my Tracking Inflation and I Bonds page with the new data.

And here are the new May inflation indexes for all TIPS.

• The current fixed rate of 0.5% is likely to fall on May 1, possibly to as low as 0.2%.
• I Bond investors can lock in that 0.5% fixed rate for up to 30 years by investing before April 30.
• A new inflation-adjusted variable rate is also coming May 1 and may be substantially lower than the current 2.32%.

I failed to follow my own advice this week. I put in an order to buy my full 2019 allotment of U.S. Series I Savings Bonds on March 28. Why? Because the time is right to buy I Bonds.

Read my full analysis on SeekingAlpha.com

• The after-inflation yield was the lowest for any 9- to 10-year TIPS auction since January 2018.
• The inflation breakeven rate came in at 1.94%, a fair number that indicates this TIPS is neither cheap nor expensive versus a nominal Treasury.
• Looking for a better option for inflation protection? Consider U.S. Series I Savings Bonds, purchased through April 30.

Read my full analysis on SeekingAlpha.com

• In a reversal of recent trends, food and energy prices increased while other prices were muted.
• Core inflation rose only 0.1% in the month, below the consensus estimate of 0.2%.
• Non-seasonally adjusted inflation rose 0.42% in February, a bit of good news for I Bonds’ variable rate reset, coming May 1.

February’s non-seasonally adjusted increase of 0.42% is good news for holders of – and possible future investors in – I Bonds.

Read my full analysis on SeekingAlpha.com

Check my Tracking Inflation and I Bonds page for the updated numbers.

And here are the new April Inflation Indexes for all TIPS.