How much do you think the interest rate on I bonds will be in November?

Question

I buy about $200 dollars in I bonds monthly with my son as the beneficiary. I am just curious.

Answer 1

I think interest rates will be a little bit higher than they are now. The Fed has paused with their attack of increasing of short term rates ... remember what the word pause means ... it means to stop temporarily. Between now and November, I think they'll raise rates at least one more time, very possibly twice.

With I-Bonds, you need to be most concerned with what the rate of inflation is (since the I-Bond rate is based on the CPI). I expect inflation to stay at least where it is, given high energy prices and the continuing affect this has on all areas of the economy.

Answer 2

I believe bond futures have priced in a 6% rate for year end. Remember, the fed is only 1 place interest rates are affected. Yes, the fed can raise rates, but if bond prices weaken, interest rates will rise (interest rates are inverse to bond prices).

The 5, 10 & 30 year bond prices are falling, which means interest rates will continute to rise. They are all trading below their 50 period EMA. A break below their 200 period EMA will signal continued weakness. How much in November? Don't know, but I'm sure they'll be higher than they are now.