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Could Rising Real Yields Cause The Treasury To Raise The I Bond’s Fixed Rate Above 0.0%?

Mar. 04, 2021 4:48 PM ETiShares TIPS Bond ETF (TIP)SCHP, VTIP
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Bonds, Long-Term Horizon, I Bonds, TIPS

Seeking Alpha Analyst Since 2011

I am no longer writing for this site. More details. I will continue to post updates at my site, TipsWatch.com.


David Enna is a long-time journalist based in Charlotte, N.C. A past recipient of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and was a founding editor of The Charlotte Observer's website. The Tipswatch blog, which launched in April 2011, explores ideas, benefits and cautions about U.S. Series I Bonds and Treasury Inflation-Protected Securities, which David believes are an under-appreciated and under-used investments. David has been investing in TIPS and I Bonds since 1998.

There’s been a lively discussion going on over at the Bogleheads forum about the possibility that the recent rise in real yields could prompt the Treasury to raise the fixed rate on the Series I Savings Bond above its current 0.0%. And that leads to the question: “Should I buy I Bonds now, or wait until later in the year?”

The correct answer is: “It doesn’t matter.” The Treasury will reset the I Bond’s fixed rate on May 1 and then again on November 1. I’d say with 99% certainty that the fixed rate will remain at 0.0% in the May reset, and it’s “highly likely” it will stay at 0.0% in November. I already bought my full 2021 I Bond allocation — in January — because I had a maturing TIPS that provided the needed cash.

Read my full analysis on Tipswatch.com

Fixed rates

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