New I-Bond Rates, November 2007 reset

Posted on our Facebook Forum by Runner Twentysix October 17, 2007.

All data is in to estimate the new variable reset beginning in November for existing I-Bonds.

The CPI-U history for the six month 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 208.49

The Sep. jump in CPI was large. This brings the new rates up from the trend we were seeing of a dismal reset.

My estimate for the new rates for existing bonds will be the following when their 6-month reset period arrives.

Base----Rate
1.0%----4.07%
1.1%----4.17%
1.2%----4.27%
1.3%----4.38%
1.4%----4.48%
1.6%----4.68%
2.0%----5.09%
3.0%----6.10%
3.3%----6.41%
3.4%----6.51%
3.6%----6.71%

Current I-Bonds are at a 1.3% base rate, which means if you buy them before the end of this month, you will get 3.74% followed by 4.38% at their next reset in 6 months.

If they leave the base rate at 1.3%, new Nov issue bonds would carry a 4.38% rate.

Check the Treasury Direct website www.treasurydirect.gov on October 1, 2007 for the actual new base rate.

BND: Info on Vanguard's Total Bond ETF

Phil asked this question in our facebook Bob Brinker Discussion Forum:

Phil Bradford (Inland Empire, CA) wrote 14 hours ago:

The total bond ETF by Vanguard, symbol BND, has been discussed for a simplified fixed income allocation. For the life of me, I can not find out its duration. Can someone tell me what the duration of this bond ETF is?
Thanks.

I replied to Phil's post:

You replied to Phil's post 12 hours ago

• BND: Fundamental Data As of 6/30/2007
• Average Weighted Maturity (years) 7.30
• Average Coupon 5.50%
• Average Duration (years) 4.70


• Memorize "etfconnect" as in http://www.etfconnect.com/select/fundpages/fixed_etf.asp?MFID=176476
  and
  beware of Premium/Discount = 0.33%

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Phil Bradford (Inland Empire, CA) replied to your post 5 minutes ago:

As usual you rock!
Thanks.
Phil

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