Savings Bond Alert #022

Wednesday, July 19th, 2006
Categorized as: Savings Bond Alerts

CPI up, Savings Bond investments down, future US credit rating questioned

June’s prices were up 4.3% from a year ago, the Bureau of Labor Statistics announced this morning. The Series I bond inflation component is based on the difference between the March and September levels of the Consumer Price Index. If prices rose no farther, the next I bond inflation component would be set at 3.10%. At the other extreme, if inflation for the six-month Mar-Sep period matches the rate of the first three months, April through June, the next I bond inflation component would be 6.21%. For more information on how inflation affects I bond rates, see our monthly Inflation update.

New Savings Bond investments in June dipped to the lowest level in several years. Fewer dollars were invested in Series I Savings Bonds than Series EE bonds for the first time since EE bonds were given fixed rates in May 2004. For more information, see I bond investments drop below EE level in June.

Standard & Poor’s, which, among the many things it does, gives credit ratings to governments, has released a study called Global Graying that says aging populations are a credit risk to most industrial governments, including the US. Moreover, the study poses a scenario in which central bankers might allow inflation to reach a level of 20% a year as an “inflation tax” to help governments deal with their debt burdens. There’s more on S&P’s Global Graying reports at US credit rating could drop within 10 years, Credit rating agency says US fiscal readiness deteriorating, and Coordinated central bank “inflation shock” posed by S&P scenario.

Redemption before one-year and expedited processing of lost bonds are available to victims of flooding in the northeast under a Treasury disaster relief program. For more information, see Early redemption available to flood victims in northeast.

Other stories on the Savings Bond Advisor web site in the last month include:

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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:

One Comment

On August 8th, 2006 Dennis Grant said:

You are doing a wonderful job with your appealing site. Thank you for providing a valued and needed service, enhanced by your insights, reporting, and analysis. Well done!

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June 1, 2010

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