Treasury bond yields have jumped since spring, but interest rates on popular U.S. savings bonds will be lower in the next six months than in the last six, the Treasury Department said Monday.
Rates on so-called inflation-indexed savings bonds will fall sharply.
The government adjusts rates on new and outstanding savings bonds twice a year, on Nov. 1 and May 1.
For traditional Series EE bonds, the interest rate is pegged to the five-year Treasury note yield. The EE bond rate is changed every six months to be 90% of the average five-year T-note market yield in the preceding six months.
For the six-month period ending April 30 of next year, the annualized rate on new EE bonds and on those issued since May 1, 1997, will be 2.61%, down from 2.66% in the previous six months, the Treasury said.
Although bond yields in general have risen since June, they were at generational lows for much of spring, so the average T-note yield was lower in the last six months than in the previous six.
The annualized rate on newly issued inflation-indexed Series I bonds will be 2.19% for the next six months, down from 4.66% on bonds issued in the previous six months, the government said.
The I bonds' interest rate is calculated by adding a fixed rate, now set at 1.1%, to the inflation rate over the preceding six months as measured by the government's consumer price index.
The consumer price index was driven higher last winter by surging energy prices. That boosted the return on I bonds in the last six months. But since spring the inflation rate has declined, so the inflation addition to I bonds' returns has dropped.
Returns will vary in the next six months for I bonds issued before last May, because the fixed-rate set on those bonds was at higher levels than now.