I-Bond Fixed Rate Percentage

[modhatter]

Does the fixed rate % part of the bond ever change? If so what makes it change? Do interest rates going up effect it's yield? How so? I am not talking about the inflation index rate which changes with inflation.

 

[grumpy]

No, the fixed rate does not go up ... that's why its called "fixed".

 

[wabmester]

Well, the fixed rate for a given bond never changes. But the fixed rate for new issues changes every six months. I haven't seen them publish the algorithm, but it's probably based on the market average for 5-year TIPS. The 5-year real rate has inched up a bit (currently about 1.5%), so you'll probably see an increase in the fixed rate of i-bonds for the new issue in November.

 

[JPatrick]

And buy them on the last  business day of the month: Your cash earns from the 1st and your bond earns from the first. 8)

 

[Gone4Good]

And buy them on the last  business day of the month: Your cash earns from the 1st and your bond earns from the first. 8)

Good tip!

 

[modhatter]

Yes, I realize it doesn't go up after you purchase it. I am talking about when they issue new bonds. What is that rate tied to that makes it go up or down?

 

[cute fuzzy bunny]

Some random imaginary number thats way too freakin low.

 

[wabmester]

Some random imaginary number thats way too freakin low.

Blame the market. The real return is completely market driven. As I said, it's currently 1.5% for 5-year TIPS, and i-bonds are more-or-less 5-year TIPS, so I'm sure that's what the treasury uses to determine new issue rates (at least that's been true in the past).

 

[Brat]

(), that is the % in addition to the CPI.

 

[cute fuzzy bunny]

OK then...some random imaginary number thats way too low, added to another imaginary number manipulated number that bears little resemblance to actual inflation

 

[RockMiner]

I thought the fixed rate was due to be posted today, but it hasn't shown up on the Treasury web site yet?