Treasury: Series I bond rate is 3.11% through April 2025.
In our opinion, real interest income alone is currently reason enough to invest, although we expect interest rates to fall slightly in 2024 and, as a result, also expect moderate upside potential for prices. Bonds now a fully fledged part of the investment universe after many years of low yields.
This composite rate of 3.11% applied to $10,000 in I bonds, would earn a guaranteed $155.50 in interest over the next six months (not $311, that's because it's an annualized rate) — but you cannot cash in your bond until you've held it for a year. So why even mention the six-month take?
With the November 2024 update, I bonds now carry: New Fixed Rate of 1.20% New/Renewing Inflation rate of 1.90%
Purchase prices start at $25, and you can buy in any amount above that up to $10,000 per person, per calendar year. You also can buy an I bond in paper form, through the Tax Time Purchase Program.
After 14 months of stagnancy, the Federal Open Market Committee (FOMC) lowered the federal funds rate three times in 2024, ending the year with a target range of 4.25% to 4.50%, the lowest since February 2023.
Mike Cudzil, senior bond portfolio manager at Pimco, says he believes bonds will be attractive relative to stocks in 2025. If the Fed cuts rates further this year, as expected, that would give bondholders a boost in price. Bond yields and prices move inversely.
Against this backdrop, the MPC decided to reduce the policy rate by 25 basis points, to 7.75%, with effect from 22 November 2024. The decision was unanimous.
Unlike I-bonds, TIPS are marketable securities and can be resold on the secondary market before maturity. When the TIPS matures, if the principal is higher than the original amount, you get the higher amount. If the principal is equal to or lower than the original amount, you get the higher original amount.
Currently, Treasuries maturing in less than a year yield more than CDs. However, at maturities of one year and beyond, CDs yield a little more before taxes. Therefore, all things considered, it likely makes more sense to choose Treasuries over CDs for shorter-term investments, but it depends on your situation.
for the quarter ending June 2024, the T-Bill rate was 5.39%. for the quarter ending March 2024, the T-Bill rate was 5.39%. for the quarter ending December 2023, the T-Bill rate was 5.45%. for the quarter ending September 2023, the T-Bill rate was 5.45%.
If you hold the bond for less than five years at the time when you cash it in, you will lose the last three months of accrued interest. On the other hand, you can avoid the I Bond withdrawal penalty by holding onto your bonds for the long haul.
Cons of I Bonds
This cap makes I Bonds unsuitable for those looking to invest larger sums. Early withdrawal penalty: If you cash in your I Bonds before five years have passed, you lose the last three months of earned interest. This penalty may impact liquidity for those who need their funds sooner.
Despite 2 cuts in the short-term fed funds rate and the likelihood of more to come, 10-year Treasury bonds yield more as of December 3, 2024, than they did at the beginning of the year.
Investment strategists surveyed by Bankrate see the 10-year Treasury yield at 4.14 percent at the end of December 2025. That's up from the third-quarter 2024 prediction of 3.53 percent, but still slightly under 4.53 percent, the current trailing-12-month yield of the 10-year Treasury.
The fed funds target rate is now set at 4.25% to 4.50%. The Fed held rates at 5.25% to 5.50% from July 2023 to September 2024. Between March 2022 and July 2023, the Fed raised rates eleven times, from near 0%. Source: U.S. Federal Reserve, December 18, 2024.
The short answer is: It's highly unlikely we'll see mortgage rates drop back to 3% anytime soon. However, recent inflation numbers point to cooling of the pace of inflation.
Five-year fixes are cheapest – for now.
In normal times, interest rates tend to get more expensive the longer you fix your mortgage for. But for the past couple of years, interest rates on five-year fixes have often been cheaper than two year-fixes – with even some 10-year fixes beating two-year deals in recent times.
The 4.28% composite rate for I bonds issued from May 2024 through October 2024 applies for the first six months after the issue date. The composite rate combines a 1.30% fixed rate of return with the 2.96% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U).
Normally, you're limited to purchasing $10,000 per person on electronic Series I bonds per year. However, the government allows those with a federal tax refund to invest up to $5,000 of that refund into paper I bonds. So most investors think their annual investment tops out at $15,000 – one of the key I bond myths.
November 1, 2024. Series EE savings bonds issued November 2024 through April 2025 will earn an annual fixed rate of 2.60% and Series I savings bonds will earn a composite rate of 3.11%, a portion of which is indexed to inflation every six months.