I Bond rates, where are they headed

Posted on our Facebook Forum by Runner Twentysix September 19, 2007.

As of today, September 19 2007, we are now 5/6 of the way through the next reset period for I-bonds. For the second month in a row, there was a DROP in the CPI-U. The CPI-U history for the first 5 months of the reset period (Mar. 2007-Sep. 2007) is as follows:

Mar. CPI-U 205.352
Apr. CPI-U 206.686
May. CPI-U 207.949
Jun. CPI-U 208.352
Jul. CPI-U 208.299
Aug. CPI-U 207.917
Sep. CPI-U TBD (available mid Oct. 2007)

If the reset were today (which it is NOT since there are still one month to factor in, up or down) the new rates would be:

Base----Rate
1.0%----3.51%
1.1%----3.61%
1.2%----3.71%
1.3%----3.81%
1.4%----3.92%
1.6%----4.12%
2.0%----4.52%
3.0%----5.54%
3.3%----5.84%
3.4%----5.94%
3.6%----6.14%

Current I-Bonds for sale are at a 1.3% base rate, and current yield of 3.74% for the first 6-months. Their reset would then be 3.81%(+- the next one month CPI-U change).