IBonds To Pay 3.36% for Next Six Months

I believe Bob Brinker said we are seeing deflation but that is due to a bubble in inflation a year ago due to higher oil prices. Those good at math can easily see the bubble in the CPI-U data [CPI-U Table.] Remember Bob Brinker used to claim higher prices for oil were deflationary, but that was wrong. Everyone else knew higher prices for ANYTHING is inflationary. Brinker has also ignored evidence that we are getting a decent amount of inflation on a six-month basis as evidenced by the good rates now available for Series-I Bonds.

The Bureau of the Public Debt today announced an earnings rate of 3.36% for Series I Savings Bonds issued from October 2, 2009 through April 30, 2010. Press Release

The 3.36% earnings rate for I bonds bought from November 2, 2009 through April 30, 2010 will apply for their first six months after issue. The earnings rate combines a 0.30% fixed rate of return with the 3.06% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U). When the inflation rate is less than zero, a bond's earnings rate is less than its fixed rate (but the earnings rate is never less than zero).

• CPI-U Table

The fixed rate applies for the 30-year life of I bonds purchased during this six-month period.

Minimum purchase:

• $50 for a $50 I Bond when purchasing paper bond certificates
• $25 for a $25 I bond when purchased electronically via TreasuryDirect

Maximum purchase(per calendar year):

• $5,000 in TreasuryDirect and $5,000 in paper bonds
• $10,000 total per social security number
  

Denominations:

• Paper bonds: $50, $75, $100, $200, $500, $1,000, and $5,000
• Electronic bonds via TreasuryDirect: purchase to the penny for $25 or more

For more information, see:

• I Bonds Explained
  
  
• Current iBond Rates
  
  
• iBond Rate History

For older ibonds and what they will pay, see:

I Bond Composite Rates (iBonds)

Understanding Kirk's Two Newsletters

Disclaimer: I own Series I Bonds in my personal account. Due to the small amount of i-bonds you can buy now, I own far more TIPS and TIPS funds in my personal and newsletter (FREE SAMPLE) portfolios.

High Inflation Data Good News for I-Bonds & TIPS

Bob Brinker should have fun explaining how this high inflation data is good news for iBonds (Inflation Protected Bonds) and TIPS (Treasury Inflation Protected Securities) this weekend.

I posted two articles at the "Bob Brinker Fan Club Blog" worth reading. They are:

• Wednesday, April 16, 2008:
  I-Bond Rates To Soar on High Inflation Data
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• Tuesday, April 15, 2008
  March Inflation Up on Higher Energy and Food Costs

Vanguard's TIPS index fund (VIPSX) was up 11.59% in 2007 and is up 4.74% YTD in anticipation of these high inflation readings. With inflation expected to moderate, I don't expect to see this level of performance continue.

Disclaimer: I have a fairly large position in TIPS in both my personal account and some of the newsletter porfolios in "The Retirement Advisor" investment letter. I also recommend TIPS as part of a 3-item alternative to the easy to track "Total Bond Fund" in "Kirk Lindstrom's Investment Newsletter" where I may again recommend iBonds with these attractive rates.
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