Demand for Class A government bonds, which are intended to protect against inflation, has declined this year in America After the Federal Reserve raised interest rates to curb rising inflation. This has made various savings accounts and deposits more attractive to investors, while bond yields have fallen further from their peak of 9.62% in 2022.
In the six months through November, nearly $5 billion of I-bonds were withdrawn Investors. Last year, investor behavior was completely different: in October 2022, for example, a record $7 billion of savings migrated to this security.
The bond interest rate rose slightly in November, from 4.3% to 5.27%.. Although the yield is often more attractive than other savings products, in America there are several penalties for selling inflation-tracking bonds. In the first year, for example, you can’t withdraw money from the bond, and if someone redeems it before five years, they forego interest for the last three months. Additionally, the interest rate in effect at the time of purchase is fixed for only six months – after which it reverts to the current interest rate set on the first of May and November. The interest rate on US bonds also consists of two components: a variable interest rate based on inflation, and a fixed, specified interest rate.
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