On Nov. 1, the Treasury will release new inflation, while the other is a fixed rate that remains unchanged for the bond’s 30‑year term.
The fixed portion is the key figure to monitor. It stays with the bond for its entire life and effectively guarantees a return above future inflation. In simple terms, locking in a relatively high fixed rate ensures that I Bonds generate positive real returns as long as they are held for at least five years (a penalty applies for earlier redemption).
The current I Bond fixed rate stands at 0.90%. Analysts project the new fixed rate will fall between 1.30% and 1.40%, based on yields of inflation‑protected Treasury securities.
A rate of 1.40% would represent the highest fixed rate since November 2006.
I Bonds purchased from November through April 2027 are expected to yield roughly 5.5% during the first six months.
Why income investors should pay attention
First, this serves as an important benchmark for income investors. A starting yield of about 5.5% that is shielded from inflation outperforms the returns offered by T‑bills or the 10‑year Treasury.
Second, although I Bonds are not suitable for every portfolio, they can be valuable additions to income‑focused strategies, particularly when the fixed rate is relatively high. There are some limitations: each individual may buy up to $10,000 in I Bonds per year, and the bonds cannot be redeemed for the first 12 months. Nevertheless, for an inflation‑protected cash reserve that isn’t needed in the near term, they can provide an excellent
