TREASURY NEWS

The Treasury Department announced that beginning June 2, 2008 auctions of a one-year Treasury bill will begin again to meet the government's financing needs. The Treasury Department through TreasuryDirect now offers Treasury Bills with terms of 4- weeks, 13-weeks, 26-weeks, and 52-weeks as well as Treasury Notes with terms of 2-years, 3-years, 5-years, 7-years, and 10-years and Treasury Bonds with terms of 30 years. Treasury securities can be online with as little as $100.

Investors worried about inflation can purchase TIPS (Treasury Inflation Protected Securities) directly from the Treasury Department. TIPS pay interest semi-annually with a rate tied to the increase in the CPI-U inflation index. . More information about TIPS securities.

United State Treasuries are direct debt obligations of the U.S. government and are backed by the full faith and credit of the U.S. government. Individual investors can purchase Treasuries through a brokerage firm or directly online via the Treasury Department's TreasuryDirect website. U.S. Treasury yield quotes from 30 days to 30 years are available here.

RATES ON SERIES I SAVINGS BONDS

The Treasury Department increased the fixed rate component of their Series I Savings Bonds from 0.00% to 0.70%. The new rate will mean that purchasers of the Series I bonds for the next six months will earn a return equal to the preceeding increase in the CPI index (4.84%) plus the new fixed-rate component of 0.70%. Economists are projecting an inflation rate of less than 0% over the next two quarters indicating that the Series I Bonds are likely to return less than 1% for the six months following May 1, 2009. For more information or to purchase US Savings Bonds online visit Savingsbonds.gov. Series I Bonds can be purchased directly in $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000 denominations.

RATES ON SERIES EE SAVINGS BONDS

The Series EE Savings Bonds issued by the Treasury Department will earn a fixed rate of 1.30% for Series EE bonds, issued from November 2008 through April 2009. Series EE bonds issued from May 1997 through April 2005 continue to earn market-based interest rates set at 90% of the average 5-year Treasury securities yields for the preceding six months. Market-based rates are announced effective each May 1 and November 1 for the Series EE Savings Bond. A 3-month interest penalty applies to bonds redeemed before being held five years.

LIMITATIONS ON SAVINGS BOND PURCHASES

The Treasury Department announced in December of 2007 that beginning in 2008 each individual taxpayer will be limited to $5,000 in purchases for the Series I Bonds and $5,000 a year for the Series EE Bonds down from the previous limit of $30,000. Savers who used payroll plan deduction will have to be careful to stay under the new rather tight limits.

RATES ON OLDER SAVINGS BONDS

The Treasury Department has been issuing savings bonds since the 1930s as a way to finance government debt. Originally the bonds were sold at a discount to their maturity amount, but in the 1980s savings bonds were changed so that the could interest past the face value of the bond up to a final maturity after which the bond ceases to earn interest. Surprisingly according to the Treasury Department there is over $12 billion in outstanding US savings bonds which are no longer earning interest. If someone in your family owns an old savings bonds check the issue date to ensure that it has not matured, because owners of these savings bonds could reinvest in a Treasury Department product like a Series EE Bond (1.40%), Series I Bond (4.68%), 90-day T-Bill (1.90%), 180-day T-Bill (2.14%), or 2-year T-Note (2.87%) instead of allowing the government to hold their funds interest-free. Savings bonds which have stopped earning interest include: Series E (Issued May 1941 to May 1978), Series H (Issued June 1952 to May 1978), Series HH (Issued January 1980 to May 1988), and all Series A,B,C,D,F,G,J,K bonds.

TREASURY YIELDS

Current Treasury Yields and Yield Curve

Historical Treasury Yields

Posted 4/30/09