The Treasury Department just raised the Series I bond rate to 5.51%. It was 4.26%. Bonds bought from November 1 through April 30 get it.
The fixed portion is 1.40%. That's the highest since 2006. It was 0.90% last time.
Here is the exciting part. The rate is calculated with a formula. Fixed rate, plus twice the semiannual inflation rate, plus the product of the two. The result is 0.0550856. The Treasury rounds it to 5.51%.
That trailing 0.0000856 is the most volatile thing you will own all year.
The retail trader will hate this bond. It has no ticker. No chart. No Discord channel screaming rocket emojis. It moves twice a year, on a schedule, like a dentist appointment.
You can't day trade it. Cash out before five years and the Treasury keeps the last three months of interest. The government built a financial product that punishes impatience. Your entire demographic just got personally profiled.
The variable rate comes from the Consumer Price Index. That's the inflation number. You've been complaining about it at the grocery store. Now it's paying you, slightly, to keep complaining.
The composite rate peaked at 9.62% in May 2022. Millions of people bought in and told their coworkers about it. Then rates fell. Many cashed out. They now have a story about the time they were briefly smart.
Some will return. They always return. A bond that pays you for waiting is a bond they will abandon the moment it pays them for waiting.
Ken Tumin of DepositQuest.com says there is some uncertainty about how the fixed rate gets set. The Treasury doesn't disclose its method. So you're lending money to the government at a rate chosen by a process nobody will explain. Honestly, that's the most relatable thing about it.
My technical read: the line goes sideways, then it goes sideways again. I have never been more bullish on boredom.
Buy the bond. Hold it for thirty years. It's the only relationship you'll ever keep that long.
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