New Savings Bond investments down 50%

Tuesday, March 13th, 2007
Categorized as: Savings Bond investment rate

According to data provided by the US Treasury, new investments in Savings Bonds for the current fiscal year (Oct 06 – Sep 07) are running at an annual rate of about $4 billion. This is down a little more than 50% from the rate of investment a year ago.

Series EE investments are up a bit from last year’s sluggish pace, so the entire drop is due to a lack of investor interest in Series I bonds. I bond investments make up 51% of the total, down from 77% last year.

So far, this is the slowest year for I bond investments since fiscal years 1999 and 2000, which came right after I bonds were introduced.

Moreover, in a typical year, new investments in Savings Bonds are much higher from October through February than from March through September, so these investment numbers are more likely to get worse than to get better as the fiscal year continues.

Readers of my book have access to an online graph showing the level of Savings Bond investments since Series I bonds were introduced in 1998. Check your Book Notes for the link.

Rate this post (1 to 5 stars):  1 Star2 Stars3 Stars4 Stars5 Stars
(Average rating: 5.00 stars)
Loading...

FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:

2 Comments

On March 14th, 2007 Mario said:

Tom,

I’m assuming the Treasury will have to set the I bond fixed rate higher in May if they want to increase savings bond purchases, especially since we can assume that the inflation component will be fairly low in May (and we’ll have an even better idea on Friday when the next-to-last CPI data point for the new rate is released).

However, what troubles me is that at the same time, real TIPS yields have been moving lower, 0.4-0.5% lower than their highs last year.

Any intuition how the Treasury might strike a balance between these differences?

On March 15th, 2007 Administrator said:

Hi Mario – my guess – and that’s all it is – is that the I bond fixed rate will continue to track with TIPS yields.

The amount the government borrows this year will be near all-time highs, but the amount it borrows using Savings Bonds will be near all-time lows.

Comments Closed

June 1, 2010

After six years, over 400 posts, 3,680 real comments, and over 90,000 spam comments (thank you, Akismet, for making managing a blog with comments possible), I am closing public comments on Savings-Bond-Advisor.com. I will contine to update the main articles on this site, but not the comments.

Virtually every question about Savings Bonds has been asked and answered on this site multiple times. Use the search feature (see the box in the gray area near the top of this page) or the detailed menu on the lower part of the home page to find the information you're looking for. If you have a copy of Savings Bond Advisor, you can ask me a question here.

Tom Adams

Savings Bond Calculator



Help

Savings Bond
Questions

Get an answer to your questions from the Treasury's Savings Bonds team.

Click below to ask a question.

Ask the Treasury

TreasuryDirect

Invest online in Savings Bonds or
marketable Treasury securities.

Deal directly with the U.S. Treasury.

More info

Enroll

Log in