The new composite yield pairs a permanent 1.40% fixed rate with a 4.08% semiannual variable rate, which is exempt from local and state levies. However, buyers cannot access their capital for at least one full year and will lose three months of earned interest if redeemed before five years. Due to these liquidity constraints and tight annual purchase limits, advisors often steer investors seeking higher cash allocations toward alternative fixed-income vehicles.
Key points
Investors cannot redeem their funds during the first 12 months and face an interest penal…: Investors cannot redeem their funds during the first 12 months and face an interest penalty for withdrawals within five years.
The interest earned on these securities grows tax-deferred and avoids all state and munic…: The interest earned on these securities grows tax-deferred and avoids all state and municipal taxation.
Uncapped alternatives like Treasury inflation-protected securities, Treasury bills, and h…: Uncapped alternatives like Treasury inflation-protected securities, Treasury bills, and high-yield cash accounts provide flexible options for larger balances.
Sources checked by our analysis pipeline: 1
Now that Series I bonds pay higher interest, the government-backed, nearly risk-free asset could be more attractive for certain investors. But I bonds have downsides, and there are alternatives to consider.
Newly purchased I bonds currently pay 5.51% annual interest through April 30, up from the 4.26% yield offered on purchases made through October.
Amid rising inflation, the variable part of I bond interest rose to 4.08%, while the fixed part increased to 1.40%, the highest since 2006. Combined, the 5.51% composite rate is the biggest yield since November 2022.
The new I bond rate is "very attractive," according to Ken Tumin, founder of DepositQuest.com, a blog that tracks I bond rates, among other deposit accounts.
The variable part of I bond interest resets every six months, based on the consumer price index. For the next six months after purchase, I bonds look "very competitive" compared to other shorter-term options for cash, such as savings accounts or certificates of deposit, according to Tumin.
Meanwhile, the I bond's 1.4% fixed rate stays the same for as long as you own it,…
Government bond markets rallied after diplomatic signals between Washington and Tehran sent crude futures tumbling, easing broader market anxiety regarding energy-driven inflation. The shift brought long-term borrowing costs down to multi-month lows as investors scaled back their expectations for aggressive Federal Reserve monetary tightening. Concurrently, the retreat in energy commodities helped steady equity valuations while reviving traditional hedging dynamics between stocks and fixed income.
Global energy markets shifted sharply after Tehran confirmed active diplomatic communications with Washington, presenting a conditional offer to unblock the critical Strait of Hormuz. This outreach followed a formal proposal for talks sent by U.S. Vice President JD Vance to Iranian officials, marking the administration's highest-level engagement in months. The prospect of de-escalation coincides with heightened anxiety across Wall Street as voters prepare to decide control of Congress.
Shares of the enterprise software company are trading higher during the session. However, the precise drivers and underlying market conditions propelling the upward trend remain entirely unspecified at this time. Market observers currently lack concrete explanations regarding the movement.