Bond Rates Drop

Michael Sheehan

Physician's Money Digest, January15 2004, Volume 11, Issue 1

Are you thinking of putting somemoney into the widely popular SeriesEE Treasury bonds? Beware, there hasrecently been some sour news. The USTreasury Department's Bureau of PublicDebt has reset the interest rate from2.66% to 2.61%. This rate, which isreset every November 1 and May 1, isin effect for any EE bond that wasissued either on or after May 1, 1997.The earnings rate on inflation-adjustedI bonds has also taken a sharp tumble.The new earnings rate will be 2.19%for I bonds purchased from November2000 through April 2000. That's down4.66% from the previous 6-month period.The inflation-adjusted bonds arelinked in combination to changes in theconsumer price index, which is an indicatorof inflation at the retail level, aswell as a fixed-return rate that remainsthe same for the term of the bond.