I Bond fixed rate projection just fell to 0.90%

Posted on October 12, 2025 by Tipswatch

Oct. 24 update: September inflation report sets I Bond variable rate at 3.12%

By David Enna, Tipswatch.com

It was inevitable that the trend of lower 5-year real yields would eventually push my I Bond fixed rate protection to 0.90%, down from the current 1.10% for I Bond purchases through this month.

The inevitable became fact on Friday, when the Treasury’s estimate of the 5-year real yield closed at 1.30%.

As I noted in an October 5 posting, the Treasury has no announced formula for setting the I Bond’s fixed rate, which is permanent for the potential 30-year life of the savings bond. However, I Bond watchers have settled on a forecasting tool that seems to work: Apply a ratio of 0.65 to the average 5-year TIPS real yield over the preceding six months. This formula has worked without fail at least since 2017.

As of Friday’s close, here is the updated forecast:

Friday’s close marked the first day the 0.65 ratio formula has resulted in a rounded fixed rate of 0.90% versus 1.00% earlier in October. The new fixed rate will take effect on November 1 and apply to I Bonds sold between November 2025 and April 2026.

Obviously, the ratio result of 0.9499% is a razor-thin margin (0.95100% would round up to 1.00%) but the trend is clear: The fixed rate is going to be 0.90% at the November reset, if the Treasury continues practices it has used over the last decade. To get back to 1.00%, the average over the next 12 market days would have to be 1.47% or higher, which doesn’t seem likely.

Is there a strategy?

Fill the purchase cap this month. If you are a committed I Bond investor and haven’t yet purchased up to the full $10,000 per person limit this year, I recommend that you do that this month at TreasuryDirect. In its BuyDirect system, you can schedule the purchase for later this month. I recommend setting the date for Oct. 28 or 29, to give some time to complete the process before the rate reset. An I Bond purchased late in a month earns a full month of interest.

Use the gift box to add to your purchases. I am not a “fan” of the gift-box loophole for purchasing I Bonds above the limit, but it is legit and can be used if you have a trusted partner for swapping purchases. I did that last year for two two extra sets at a fixed rate of 1.30%, and had no plans to do it again. However … I am doing it again this month.

For more on the gift-box process, read Harry Sit’s excellent summary, updated in 2023.

My plan is to purchase the I Bond gift-box sets in late October and deliver them in November, before the end of the calendar year. (Gift-box deliveries count against the purchase cap, but only if the recipient has not yet purchased that year. Delivering in 2025 leaves the option open for a traditional purchase in 2026.)

Why use the gift box now? Because it looks likely that the changes are coming to the gift-box program, as I noted in an article last week: “TreasuryDirect email is an omen of coming changes.” I don’t know what’s coming, or when. But something is up.

The logical choice is to buy I Bonds at 1.10% instead of 0.90%. If you were going to make the purchase in January anyway, it makes sense to move it up to this month, if you can swing it financially.

Clarity coming on variable rate

The government shutdown was threatening to send the inflation-reporting process into chaos, but that situation was eased last week when the Trump administration allowed Bureau of Labor Statistics staffers to return to prepare the September inflation report. That report is crucial mainly because it will determine the 2026 Social Security cost-of-living adjustment, which by law must be set by November 1. It also will set a new variable rate for all I Bonds, no matter when they were issued.

We will get the September inflation report at 8:30 a.m. Friday, Oct. 24, just a few days before the Federal Reserve will meet Oct. 28-29 to decide if it will reduce short-term interest rates. The inflation report will set the I Bond’s new variable rate. On the morning of Friday, Oct. 31, we should learn the new fixed and composite rates for I Bonds purchased from November to April.

I haven’t yet seen projections for the September rate of non-seasonally adjusted inflation, but I would expect it to be in a range of 0.20% to 0.40%. Combine that with a fixed rate of 0.90% and you get these results:

  • 0.2% = variable rate of 3.02%, composite rate of 3.93%
  • 0.3% = variable rate of 3.22% composite rate of 4.13%
  • 0.4% = variable rate of 3.42%, composite rate of 4.34%

If the result falls into this range, the new composite rate should be close to or higher than the current rate of 3.98%, even with the fall in the fixed rate to 0.90%. Purchases in October will receive the 3.98% composite rate for a full 6 months, and then transition to the next variable rate, combined with the current fixed rate of 1.10%.

Here are the potential future composite rates for I Bonds purchased in October with the higher fixed rate of 1.10%:

  • 0.2% = variable rate of 3.02%, composite rate of 4.14%
  • 0.3% = variable rate of 3.22% composite rate of 4.34%
  • 0.4% = variable rate of 3.42%, composite rate of 4.54%

Keep in mind that the actual rate of non-seasonally adjusted inflation will be something like 0.25% or 0.34%, so a lot of variations are possible. These numbers are a rough guide.

At this point, the I Bond’s composite rate is competitive with the 13-week T-bill at 4.02%, and will gradually be even more appealing as the Fed cuts short term interest rates into next year. I remind, as always, that the three-month interest penalty for redemptions within five years reduces the I Bond’s advantage as a short-term investment. So think longer term.

I Bonds with a fixed rate of 0.90% will remain an attractive way to store inflation-protected cash for future uses.

• 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, Federal Reserve, I Bond, Inflation, Savings Bond, Social Security, Treasury Bills | Tagged , , | 40 Comments

TreasuryDirect email is an omen of coming changes

Posted on October 9, 2025 by Tipswatch

Again, a prod to deliver gift-box savings bonds. Quickly.

Series I Savings Bonds are a U.S. Treasury investment.

By David Enna, Tipswatch.com

Savings Bond investors who are holding I Bonds in “gift-box” storage are getting emails from TreasuryDirect this week advising them to deliver the bonds to the intended recipient. Like (hint, hint) now.

I haven’t received the email, because I delivered all our gift-box I Bonds in 2024, also the year they were purchased. But readers have sent me the text:

Dear TreasuryDirect Customer,

Treasury is always looking for ways to enhance your experience. This includes simplifying the gift bond delivery process. Our records show that your account holds undelivered gift bond(s). To best prepare for coming changes, we recommend delivering your gift bond(s). Delivering gift bond(s) enables your recipient to experience the full benefit of your gift.

Promotes Timely Access and Ownership: Maybe you’re waiting for a certain milestone to gift your bond or simply haven’t gotten around to it. Remember, the registered recipient is the sole legal owner of the bond as soon as you purchase it. Delivering the gift bond promptly ensures the smoothest gifting process.

Grows Investments and Financial Awareness: Delivering gift bond(s) to younger recipients can give them a head start on financial literacy. These bonds may also serve as valuable resources for tuition costs or other important life expenses down the road.

This email echoes the rather vague instructions TreasuryDirect sent a year ago, which I wrote about in this post: “Deciphering TreasuryDirect’s mysterious gift-box email.” In that email, Treasury advised: “Please deliver your gift to the recipients account as soon as possible.” Then in early January 2025, TreasuryDirect sent out a survey about the gift-box process, raising more questions. But since then … silence.

The key words of this new email are “coming changes.” That is an explicit signal that changes are coming to at least the gift-box program and possibly in a broader sense to the entire savings bond system.

Plus, we now have an FAQ

The TreasuryDirect email includes a link to frequently asked questions about this gift-box issue. Here are the Qs and As, along with my thoughts:

How do I deliver a gift savings bond?

Visit TreasuryDirect, log into your account, visit the Gift Box tab on your account page, select the bond, and click “deliver.” You will then enter your recipient’s information, including your recipient’s TreasuryDirect account number. Visit the “How to deliver a gift savings bond — TreasuryDirect” page for more information and to view a video tutorial.

Reaction: The video has good step-by-step instructions. Notice that you need the TreasuryDirect account number of the recipient to complete this process. This should be no problem for most people (couples, for example) but could be a sticking point if the recipient is your niece currently living in France.

How is Treasury enhancing the experience of TreasuryDirect customers?

Treasury is always looking to improve your experience. Future enhancements are still being determined, but we will share information as it becomes available.

Reaction: Purposely vague, but a clear indication that changes are coming to the savings bond process. Hint: I would suggest raising the annual per person purchase limit from $10,000 to $20,000 (or higher), which would mostly eliminate the need for gift-box purchases.

I am sure that TreasuryDirect realizes that the gift-box process is heavily used by sophisticated investors looking to expand their inflation-protected holdings in a very safe investment, the I Bond. So why not adjust I Bond sales to reflect that demand?

Is the gift bond program being eliminated?

At this time, the gift bond program is not being eliminated. However, we will share more information as it becomes available.

Reaction: Vague and not conclusive. I read it as “we are considering all options,” but I suspect Treasury has some solid ideas to de-emphasize gift-box purchases.

Is there a deadline for delivering gift bonds?

Delivering gift bonds proactively prepares you for upcoming enhancements and enables your recipient to experience the full benefit of your gift.

Reaction: Again, this is an all-out announcement that changes are coming.

Is delivering my gift bonds mandatory?

You are encouraged to deliver gift bonds now to ensure you are prepared for coming enhancements and so your recipient can experience the full benefit of the gift bond.

Reaction: Last year, I Bond investors were dizzy when TreasuryDirect seemed to ask them to deliver gift-box purchases “as soon as possible.” That was counter to “accepted” beliefs about delivery limits per year.

We all thought a $10,000 delivery would not be allowed in a year when the recipient had reached the purchase cap. Wrong. We thought multiple purchases and immediate deliveries would never be allowed. Wrong. We thought maybe future purchases by the recipient would be limited. Wrong.

New instructions: You are encouraged to deliver gift bonds now. Got it?

What happens if I don’t deliver my gift bond(s)?

Gift bond recipients are the sole legal owners as soon as they are purchased, so holding undelivered gift bonds introduces potential complications.

Reaction: Potential complications? Not under the current gift-box system, but possibly after changes are made. I am not sure what to make of this.

Is there a limit to how many gift bonds I can deliver to their recipient(s)?

You can only deliver one gift bond at a time. There is no limit to the amount a recipient can receive; however, once they have received $10,000, they should not purchase additional savings bonds that year because gift amounts are applied towards the purchase limit.

Reaction: BOOM! There are two very important messages here: 1) You can deliver gift-box purchases one at a time, but as often as you like, which means unlimited deliveries are possible. 2) The gift-box delivery will count toward the recipient’s purchase cap, but only if they have not yet made a standard purchase this year.

In other words: Have the recipient make the standard $10,000 purchase first, then deliver any or all gift-box items to the recipient, one at a time. That’s how I read this and it is also how the process worked last year, surprisingly.

This is an “almost-clear confirmation” of what we have been experiencing.

Can my recipient cash out gift bonds over the annual purchase limit once they’re deposited into their account?

There is no limit to the amount of bonds a recipient can cash out from their TreasuryDirect account, regardless of how the bonds were acquired. Bonds can only be cashed out if it has been at least one year since the bond was purchased.

Reaction: There never was any restriction on the number of bonds any person could redeem, once the bonds are in their account and have passed the one-year deadline. But this clarifies that is true.

Does the recipient have to accept the gift bond for it to be delivered?

The recipient does not have to accept the gift bond for it to be delivered. … Undelivered gifts remain in the purchaser’s gift box, which prevents the intended recipient from benefiting from the gift.

Reaction: A person might logically reject the gift bond if that person wanted to first purchase I Bonds the standard way, before receiving the gift. I would guess that most “trusted partners” would coordinate on the deliveries. Also, if the recipient has not yet opened a TreasuryDirect account, that would delay the process.

What happens to undelivered gift bonds in the account of someone who has died?

A Treasury gift bond belongs to the recipient and is considered the property of the named recipient from the moment it’s purchased. Estate laws vary from state to state — please work with the executor or legal representative if either the gift giver or the recipient is deceased.

Reaction: If you think you could be close to death, deliver those gift I Bonds immediately. No reason to get probate courts involved in this process. I think it is a good idea to reduce TreasuryDirect holdings as you get closer to “lifetime expiration.” Let the T-bills mature, for example. I Bonds in a “with” ownership account with your spouse are probably OK; others may have different advice.

Still having trouble?

If you can’t find the answer to your question, call us at 844-284-2676 from Monday-Friday, 8am-6pm.

Reaction: Before you call, locate your TreasuryDirect account number. I called. The answering phone message immediately confirms that the gift-box email was legitimate. I punched through to get to a Fiscal Services agent.

I told the agent I was a journalist and asked: “Can you tell me what changes are coming to the TreasuryDirect system?” Answer: “I can’t provide information on that at this time.” Question: “But you do know about the changes?” Very long pause. “No.”

I also asked for clarification on the “have recipient purchase first and then deliver unlimited gift-box sets to that person” question. Answer: “That will work but the system may reject the purchase.” Question: “But it will be OK if the deliveries are done one at a time?” Answer: “That is correct.”

Question: “So a person could go in today and buy multiple sets of gift-box I Bonds and then deliver them this year?” Answer: “Yes, but you’d have to wait five days to make the delivery.” (The 5-day rule has always been in effect).

Can I guarantee that this is accurate information? No, but it is exactly in keeping with the FAQ that TreasuryDirect provided, so I believe it is.

Is there a strategy?

I have more or less given up on the gift-box strategy after diving in last year. Now I am warming up to buying one set (in my account and my wife’s) later this month. The reason: I was going to make a 2026 purchase anyway, and the fixed rate is likely to fall from 1.10% to 0.90% at the November 1 reset. I might as well buy a couple months early and lock in the higher fixed rate.

Remember, there are no tax consequences incurred when you deliver or receive a gift I Bond. Taxes on interest earned are only owed at redemption.

Eventually, we are going to learn what TreasuryDirect is planning. I thought that last year also with the prodding email followed up by the survey in January. Maybe we will see changes before then end of 2025.

My suggestion to TreasuryDirect, again, is to raise the savings bond purchase limit to at least $20,000 and eliminate the need for excess gift-box purchases. On the other hand, maybe the gift-box loophole will get severely curtailed.

But maybe something weirder is coming, like privatizing or outsourcing savings bond support and management? Emptying the gift-box rolls would make management of savings bonds much simpler. I doubt this would happen, but who knows?

• I Bond rate reset: We’re heading toward chaos

• 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 | 84 Comments

I Bond rate reset: We’re heading toward chaos

Posted on October 5, 2025 by Tipswatch
AI-generated image for savings bond investor in chaos. Source: Perchance.org

Oct. 24 update: September inflation report sets I Bond variable rate at 3.12%

Oct. 12 update: I Bond fixed rate projection just fell to 0.90%

Oct. 10, 2025 update: The Trump administration has allowed the BLS to recall staff to prepare the September inflation report, which was due to be released Oct. 15. It will now be released at 8:30 a.m. Oct. 24, before the Federal Reserve meeting Oct. 28-29.

This is a wise move. The BLS noted: “This release allows the Social Security Administration to meet statutory deadlines necessary to ensure the accurate and timely payment of benefits.” The report will set the Social Security cost-of-living adjustment, Medicare fees and IRMAA levels, and the I Bond’s new variable rate.

By David Enna, Tipswatch.com

With the U.S. government on indefinite shutdown and the Treasury market showing signs of unease, the November 1 rate reset for the U.S. Series I Savings Bond is looking mighty unpredictable. It’s reasonable to ask: Will they call the whole thing off?

Time will tell. Naturally, I would love to see a resolution to this shutdown crisis in the next week, well before crucial release of the September inflation report on October 15 at 8:30 a.m. If we get that report before the end of October, a lot — but maybe not all — of the unpredictability will fade away.

Also read: TreasuryDirect email is an omen of coming changes

The basics

The Series I Savings Bond is a unique inflation-linked U.S. Treasury issue that earns interest based on combining a fixed rate and an inflation rate. All these rates will change November 1 for purchases between November 2025 and April 2026:

  • The I Bond’s current composite rate is 3.98%, annualized, for a full six months for any bond purchased through October.
  • The fixed rate will never change. Purchases through October will have a fixed rate of 1.10% for the 30-year life of the I Bond.
  • The inflation-adjusted rate (often called the variable rate) changes each six months to reflect the running rate of inflation. That rate is currently set at 2.86% annualized. It will adjust again November 1. Each new variable rate applies to all I Bonds, no matter when they were purchased.

The problem: Variable rate

Without the release of the September inflation report, there is no way the Treasury can accurately set the I Bond’s new variable rate or composite rate in any traditional way. The same is true for the updated composite rates for all I Bonds ever issued. We need that September inflation report.

See historical data on my Inflation and I Bonds page.

The new variable rate will be based on inflation for the six months of April to September 2025, which through five months has totaled 1.31%. That translates to a variable rate of 2.62%. If non-seasonally adjusted inflation for September runs at 0.3% (seems possible), the six-month inflation number becomes 1.61% and the variable rate rises to 3.22%, higher than the current 2.86%.

Without the September number, this calculation becomes impossible. So what will the Treasury do on November 1 if the shutdown continues? Regular reader and commenter Patrick found a potential answer in the Code of Federal Regulations.

If the CPI-U for a particular month is not reported by the last day of the following month, we will announce an index number based on the last 12-month change in the CPI-U available. Any calculations of our payment obligations on the inflation-indexed savings bonds that rely on that month’s CPI-U will be based on the index number that we have announced.

The I Bond regulations don’t give any further information on the process or formula, but inflation analyst Michael Ashton wrote about this in a September 2023 article on TIPS titled: What Happens if CPI Isn’t Released?

Title 31 of the Code of Federal Regulations spells out what would happen if the BLS didn’t report a CPI by the end of October. In a nutshell, the Treasury would use the August CPI index, inflated by the decompounded year-over-year inflation rate from August 2022-August 2023.

Today’s relevant calculation would be for inflation from August 2024 to August 2025. And look out, here comes the formula:

I find this to be gibberish (I’m just a journalist) but Tipswatch reader D did post an attempt at the calculation:

September 2025 = August 2025 * (August 2025 / August 2024)^(1/12)

= 323.976 * (323.976/314.796)^(1/12) = 324.753

If the fabricated September number ends up being 324.753, you get non-seasonally adjusted inflation of 0.24% for September, a six-month inflation rate of 1.55% and a new variable rate of 3.10%. My guess is that could be slightly underestimating current inflation, but we won’t know until the true September inflation report is issued.

One thing remains unclear: Once it has the correct number, would the Treasury immediately update the composite rates for all I Bonds ever issued? This isn’t a huge factor in the short run, since I Bonds assign interest at the end of each month. Any redemption in October would get an accurate payment based on the September total. But I would hope the composite rates would be updated to be accurate.

Another problem: The fixed rate

Now we have a quandary that has nothing to do with the government shutdown: What will be the I Bond’s next fixed rate? This is important to investors because the fixed rate is permanent and creates the “real yield” — the yield above inflation — for the I Bond.

The Treasury has no announced formula for setting the I Bond’s fixed rate, meaning there is no calculation required by law or regulation enforcing the process. It is up to a decision by Treasury officials. However, I Bond watchers have settled on a forecasting tool that seems to work: Apply a ratio of 0.65 to the average 5-year TIPS real yield over the preceding six months. This formula has worked without fail at least since 2017.

With less than a month to go, I looked at 5-year real yield data from the date of the last reset on May 1, 2025, to the close of Oct, 3, 2025. Looking at just that data, the forecast is for a new fixed rate of 1.00% at the reset.

I Bond fixed rates are always set to the tenth decimal point, so that means the projection has to be rounded. If you look at the top of the chart, you can see the 0.65 ratio results in 0.9539%, a razor-thin margin to round to 1.00%. So at this point, with 18 market days remaining, the fixed rate would “likely” be 1.00%.

But what if the 5-year real yield continued at the current level — 1.34% — for those 18 market days? If that happened, the 0.65 ratio results in 0.9421% and rounds down to a fixed rate of 0.90%. Again, this is a razor-thin margin.

My “guess” is that we are heading toward a fixed rate of 0.90% but that won’t happen if real yields begin to climb for the next few weeks. We have already seen the Treasury’s estimate of the 5-year real yield climb from 1.17% on Sept. 16 to 1.34% at Friday’s close. That could be caused by unease over future Federal Reserve rate cutting or the government shutdown causing a distaste for U.S. Treasury investments, or both.

Whatever happens, I feel confident the Treasury will set the fixed rate at either 0.90% or 1.00% at the November reset, as long as it continues following practices of the last decade.

What’s the strategy?

Will the Treasury call the whole thing off? No. It looks like it has a backup plan, even if it is a lousy backup plan.

My thinking: I Bond investors who haven’t purchased their full allocation ($10,000 per person per calendar year) should consider making a purchase before the end of October — I’d suggest Oct. 28 to give a margin of safety. An I Bond purchase late in the month earns a full month of interest. But don’t cut this too close to Oct. 31.

Buying in October locks in the current fixed rate of 1.10%, which is likely to go lower for purchases after November 1. It also locks in the current composite rate of 3.98% for a full six months, and then a potentially higher composite rate in the next six months. That sort of yield should be competitive with T-bills if the Fed continues reducing interest rates this year and next.

More aggressive I Bond investors could also look to bypass the purchase cap by making “gift box” transactions in October, which require a trusted partner. More on this. Additional purchases can also be made through trusts or business-owner strategies.

Is a fixed rate of 0.9% to 1.10% still attractive? I say yes, if you consider I Bonds to be a secondary store of emergency cash, always adjusting higher for inflation. Hold for five years and then redeem when you need the money.

• 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, Federal Reserve, I Bond, Inflation, Investing in TIPS, Savings Bond, TreasuryDirect | 31 Comments

As government shuts down, Trump jettisons his choice to lead BLS

Posted on October 1, 2025 by Tipswatch

By David Enna, Tipswatch.com

It’s Day One of the U.S. government shutdown, and the crucially important, non-partisan Bureau of Labor Statistics now has one working employee: acting commissioner William Wiatrowski. The other 2,054 employees have been (or will soon be) furloughed.

The Labor Department last week published a contingency plan for the shutdown, which included these details:

  • The Labor Department’s working employees will be reduced from 12,916 to 3,141.
  • The BLS is listed in the group that will “completely cease operations.”
  • No economic data will be released.
  • All active data collection activities for BLS surveys will cease.
  • The quality of data collected in the future could be impaired.
  • The BLS website will not be updated.

The one qualification for the BLS was that activities related to backing up systems may take up to three days.

Antoni

Coinciding with the shutdown, President Trump on Tuesday withdrew the nomination of E.J. Antoni to lead the BLS. A White House official offered the New York Times no reason for the sudden change, saying only that Antoni was a “brilliant economist” and that Trump would announce a new nominee soon.

Antoni turned out to be an extremely controversial choice for a job typically filled by non-partisan, lifelong government statisticians. Trump chose him for the job after firing Erika McEntarfer in August and claiming the BLS “rigged” data to make his administration look bad.

Antoni, who authored parts of Project 2025, has been critical of how the BLS collects data. He also called for McEntarfer’s firing during an appearance on Steve Bannon’s “War Room” podcast, agreeing with the host that they needed a “MAGA Republican” at BLS.

That was a bad look for a non-partisan job, but Antoni’s nomination was further hurt by photos and video showing he was in the crowd at the Jan. 6 riot at the U.S. Capitol. Antoni contends he was a “bystander.” And then his nomination was doomed after CNN’s KFile investigative team discovered Antoni ran a since-deleted X account with sexually degrading and bigoted attacks.

All of this made me wonder if Antoni would even get to a confirmation hearing, where a lot of this inflammatory material would be discussed and Antoni would have to respond under oath. The hearing was “scheduled” for September but was continuously delayed. Apparently Republican senators Susan Collins and Lisa Murkowski refused to even meet with Antoni and others said privately they were not likely to confirm him, according to CNN.

So the nomination was pulled, and this is a good thing for the BLS on a day when 2,054 workers are being furloughed. Trump will name another nominee soon and I have a suggestion: Elevate William Wiatrowski, the interim commissioner, to the job. He was acting BLS commissioner from January 2017 to March 2019, during Trump’s first term.

The BLS shutdown

About 11 a.m. the BLS.gov website finally posted a notice about the shutdown: “This website is currently not being updated due to the suspension of Federal government services. The last update to the site was Wednesday, October 1, 2025. Updates to the site will start again when the Federal government resumes operations.”

These economic reports, among others, will not be issued during the shutdown:

  • Oct. 3: September employment report
  • Oct. 15: Consumer Price Index for September
  • Oct. 16: Real earnings for September
  • Oct. 17: Producer Price Index for September

The Bureau of Economic Analysis, which is part of the Commerce Department, has posted a notice on its site: “Due to a lapse in appropriations, this website is not being updated.” The BEA issues the Personal Consumption Expenditures Index, the Federal Reserve’s favored measure of inflation. The next report is due Oct. 31. Let’s hope the shutdown has been resolved by then.

Things are going to get tense if the BLS cannot release a CPI report for September, which is the last month of data needed to determine next year’s Social Security cost-of-living adjustment and the new variable rate for the U.S. Series I Savings Bond. In addition, that September data is important in calculating next year’s Medicare rates, IRMAA levels and even 2026 income tax brackets.

The Federal Reserve is going to be flying blind until the shutdown is resolved, with both jobs and inflation data being locked down. From the New York Times:

“It pains me that we wouldn’t be getting official statistics at exactly a moment when we’re trying to figure out is the economy in transition,” said Austan Goolsbee, president of the Federal Reserve Bank of Chicago and a voting member on this year policy-setting committee.

What’s ahead?

It’s difficult on day one to see how this crisis will be resolved, since the Trump administration seems perfectly willing to embrace the shutdown and Democrats won’t take action to end it.

Assuming the White House doesn’t go “nuclear” by implementing widespread firings of federal workers, Democrats could possibly work out a separate deal (outside of the continuing resolution) assuring consideration of legislation to extend Affordable Care Act subsidies. A lot of Republicans want those ACA subsidies extended, as noted by the Wall Street Journal:

GOP leaders are already hinting that they are open to negotiating, and some are floating ideas that would give Democrats much of what they want. “I don’t love the policy, OK?” Speaker Mike Johnson said recently. “But I understand the political realities.”

My opinion is that the GOP has the upper hand in the “spin war,” and that is why you see Republican after Republican on television extolling their “clean 7-week continuing resolution,” without any baggage they’ve added in the past (build the wall, abolish Obamacare, etc.)

Any solution is going to take time, ticking toward that crucial Oct. 15 inflation report. From the Wall Street Journal:

House lawmakers aren’t expected to return to Washington until next week and any compromise funding proposal would need their approval. Congress hasn’t passed any appropriations bills, so unlike during the 34-day partial shutdown that ended in 2019, no government offices have been funded.

Nothing about this shutdown is good news.

NOTE: While this posting has triggered ‘healthy debate,’ I have decided to shut down commenting so we can go back to focusing on real yields, inflation and safe investments.

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PayPal link / Venmo link

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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 Federal Reserve, I Bond, Inflation, Retirement, Social Security, Taxes | Tagged , , , | 54 Comments

U.S. government shutdown: What does it mean?

Posted on September 26, 2025 by Tipswatch
AI-generated image. Source: Perchance.org

By David Enna, Tipswatch.com

The U.S. government is highly likely to shut down on Wednesday, with the beginning of a new fiscal year. This is political theater, and the real danger is that the leading actors are both Republicans and Democrats, perfectly willing to go to the brink.

Escalating the threat, the Trump administration this week told federal agencies to prepare for mass firings (not furloughs) if the government shuts down. The Office of Management and Budget said the firings should target any federal program that is “not consistent with the President’s priorities.” From the Politico report:

The move marks a significant break from how shutdowns have been handled in recent decades, when most furloughs were temporary and employees were brought back once Congress voted to reopen government and funding was restored.

Politico quoted an OMB official saying programs that will continue include Social Security, Medicare, veterans benefits, military operations, law enforcement, Immigration and Customs Enforcement, Customs and Border Protection and air traffic control.

Scene II: Cue the Democrats, who pushed back at the firing threat. Or maybe I should say “shoved back,” with House minority leader Rep. Hakeem Jeffries telling the budget director to “get lost.”

Wonderful, huh? As things stand now, a government shutdown — whether short- or long-term — seems a certainty. Both political parties are welcoming the crisis for potential political gain.

What’s this all about?

The government will shut down Wednesday unless lawmakers are able to break their impasse and reach a deal to keep federal funds flowing. Republicans have offered a plan to maintain current spending levels through Nov. 21. That plan passed the House by a 217-212 vote, but was rejected the Senate, where 60 votes are needed for passage.

Democrats have offered an alternative to keep current spending going through Oct. 31 — but with a rider to add more than $1 trillion in spending to extend Obamacare subsidies that are set to expire at the end of the year. Democrats also want to roll back already-approved Medicaid cuts. The GOP says “no.”

Democrats are using the shutdown threat as leverage to restore healthcare spending that was eliminated in the One Big Beautiful Bill (OBBB). Republicans are highly unlikely to agree to that, but have offered to negotiate “in the future” once the shutdown is averted. But at that point Democrats would no longer have leverage.

Behind this is a failure by Congress to to pass a collection of 12 spending bills that would keep the government funded through fiscal 2026. Without approval of those bills, a continuing resolution is needed to keep much of the government going. So far, not one of the spending bills has passed both houses of Congress, which means a government shutdown would be widespread.

The most recent government shutdown occurred during President Trump’s first term, from Dec. 22, 2018, to Jan. 25, 2019.

Treasury issues aren’t threatened

This isn’t a “debt-limit crisis,” like we saw in 2023. The OBBB, passed in August, increased the U.S. debt limit by $5 trillion. So the Treasury will be able to continue to issue Treasury bills, notes and bonds, along with U.S. Savings Bonds. For that reason, you aren’t seeing any disruption in 4-week T-bill yields:

If investors believed T-bills would not be paid off at maturity, you would be seeing the 4-week yield rising sharply. That’s not an issue in this crisis. Instead, yields are falling in line with the Federal Reserve’s decision to cut short-term rates on Sept. 17.

I repeat: There is no risk of a government default, which would be far more serious than a shutdown.

However, some Treasury officials are likely to be furloughed (or maybe even fired), and others will be required to work without pay during the shutdown. That means Treasury services and statistical collection and reporting are going to be impaired.

For example, a shutdown could delay release of the crucially important September inflation report, due Oct. 15. That report will determine both the I Bond’s new variable rate and next year’s cost-of-living adjustment for Social Security. From a Reuters report:

A prolonged shutdown risks delaying or canceling key economic data releases investors use to assess macroeconomic trends, such as the monthly employment and inflation reports, analysts at Nomura said in a note this week.

Sept 30 update: Recent reporting from many sources indicates that a government shutdown will delay statistical reporting by the Bureau of Labor Statistics. The Department of Labor (which includes the BLS) has prepared a contingency plan for the shutdown:

  • The Labor Department’s working employees will be reduced from 12,916 to 3,141.
  • The BLS is listed in the group that will “completely cease operations.”
  • Economic data that are scheduled to be released during the lapse will not be released.
  • All active data collection activities for BLS surveys will cease.
  • A reduction in quality of data collected might impact the quality of future estimates produced.
  • The BLS website will not be updated with new content or restored in the event of a technical failure during a lapse.

What happens in a shutdown?

The potential for large-scale firings by the Trump administration adds a unique twist to this crisis. Those firings might not be legal and court challenges would be likely. However, widespread furloughs — meaning no pay even if you are required to work — are going to happen.

The non-partisan Committee for a Responsible Federal Budget prepared a Q&A on government shutdowns earlier this year.

In prior shutdowns, border protection, in-hospital medical care, air traffic control, law enforcement, and power grid maintenance have been among the services classified as essential, while some legislative and judicial staff have also been largely protected. Mandatory spending that is not subject to annual appropriations – such as for Social Security, Medicare, and Medicaid – also continues.

Some examples of the likely effects:

  • Social Security. Benefit payments would go out, but benefit verification and card issuance would cease.
  • Food inspection. During the 2018-2019 shutdown, the FDA restored some food inspections a few weeks into the funding lapse for products that were considered high-risk.
  • National parks. In 2013, the National Park Service turned away millions of visitors to more than 400 parks, national monuments, and other sites. NPS estimated the shutdown led to more than $500 million in lost visitor spending.
  • Air travel. During the 2018-2019 shutdown, air travel was strained as a result of air traffic controllers and TSA agents working without pay.
  • Health. The National Institutes of Health (NIH) would be prevented from admitting new patients or processing grant applications.
  • Environmental. During the 2013 shutdown, the EPA halted inspections for 1,200 sites that included hazardous waste, drinking water, and chemical facilities.
  • IRS. Essential IRS functions would continue, but some workers would be furloughed and others would be required to work without pay. I suspect some IRS auditors could get ornery in this scenario.

Will the government save money?

Hard to say this time, given the threat of widespread firings instead of furloughs. Generally, after a shutdown concludes furloughed workers receive back pay, even if they were not working. The CRFB says this:

While many federal employees are forced to be idle during a shutdown, they … are now guaranteed back pay, negating much of those potential savings. OMB official estimates of the 2013 government shutdown found that $2.5 billion in pay and benefits were paid to furloughed employees for hours not worked during the shutdown. …

Shutdowns also carry a cost to the economy. The Congressional Budget Office (CBO) estimated that the 2018-2019 shutdown reduced Gross Domestic Product (GDP) by a total of $11 billion, including $3 billion that will never be recovered.

What’s the solution?

Since both sides are digging in — aggressively — it seems highly likely that the government will shut down Wednesday. The blame game is already at 100 decibels with Republicans saying Democrats are refusing to pass a “clean continuing resolution” and Democrats saying Republicans are refusing “to lower health care costs for Americans.”

I suspect the Republicans will win in the end, getting a continuing resolution to fund the government into November. There is no way the GOP will accept a $1 trillion increase in government spending by rolling back legislation passed two months ago.

The Trump administration’s threat to fire federal workers in areas “not consistent with the president’s policies” was a nuclear escalation — and probably not even necessary. But it could indicate the White House will welcome an extended government shutdown.

Eventually, it could take a stock or bond market revolt to bring the crisis to a close.

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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 Federal Reserve, Medicare, Retirement, Social Security, Treasury Bills | 23 Comments