Treasury Yields Today play a crucial role in financial planning. This guide delves into how I Bond interest rates are calculated, when they change, and historical data on fixed and inflation rates. Understanding these components is vital for maximizing your investment returns.
How I Bond Interest Rates Are Determined
I Bond interest rates are a combination of a fixed rate and an inflation rate. The fixed rate remains constant for the life of the bond, while the inflation rate adjusts semi-annually based on changes in the Consumer Price Index (CPI). The formula to calculate the composite rate is:
Composite Rate = [Fixed Rate + (2 x Semiannual Inflation Rate) + (Fixed Rate x Semiannual Inflation Rate)]
For example, for I bonds issued from November 2024 through April 2025, the composite rate is 3.11%. This is derived from a 1.20% fixed rate and a 0.95% semiannual inflation rate:
[0.0120 + (2 x 0.0095) + (0.0120 x 0.0095)] = 0.0311 or 3.11%When I Bond Interest Rates Change
While new rates are announced in May and November, the actual change date for your I Bond depends on its issue date. Interest is calculated from the first day of the month of purchase. Here’s a table outlining when rates change based on the bond’s issue month:
| Issue Month | Rate Change Dates |
|---|---|
| January | July 1 and January 1 |
| February | August 1 and February 1 |
| March | September 1 and March 1 |
| April | October 1 and April 1 |
| May | November 1 and May 1 |
| June | December 1 and June 1 |
| July | January 1 and July 1 |
| August | February 1 and August 1 |
| September | March 1 and September 1 |
| October | April 1 and October 1 |
| November | May 1 and November 1 |
| December | June 1 and December 1 |
Understanding Semiannual Compounding
I Bonds employ semiannual compounding, meaning interest earned is added to the principal twice a year. This accumulated value then earns interest in the next six-month period. This compounding effect allows your investment to grow exponentially over time.
To determine your I Bond’s current value, check your TreasuryDirect account or utilize the Savings Bond Calculator for paper bonds. Note that bonds held for less than five years will not reflect the final three months’ interest due to the early redemption penalty.
Historical Treasury Yields for I Bonds: Fixed and Inflation Rates
Historical data on I Bond rates provides valuable context for understanding current treasury yields today. The Treasury Department publishes comprehensive rate charts and spreadsheets detailing historical fixed, inflation, and composite rates.
Fixed Rate History
The fixed rate, established biannually, applies to all bonds issued within the following six months and remains constant throughout the bond’s life.
Inflation Rate History
The inflation rate, also set biannually, affects all outstanding I Bonds for a six-month period. This rate fluctuates based on inflation data, impacting the overall return on your I Bond.
Current Composite Rates for I Bonds
The table below summarizes the current composite rates for I Bonds, reflecting the combined fixed and inflation rates for each six-month period.
Understanding treasury yields today, particularly concerning I Bonds, involves comprehending the interplay between fixed and inflation rates, compounding periods, and historical trends. By utilizing the available resources and this guide, you can make informed decisions about your investment strategy.
