September 2019 CPI-U numbers released: Neutral on November 2019 I Bonds

The U.S. Bureau of Labor Statistics released the September 2019 Consumer Price Index (CPI-U) inflation data last week, which increased by 0.078% over the past month.

As always, now is one of the best times to consider purchasing I Bonds. The reason for this is that we now know what the rate of return for October 2019 I Bonds will be for both the first and second six month periods, which is important since I Bonds must be held for 12 months before they can be redeemed.

Using the CPI-U data from March 2019 (254.202) and September 2019 (256.759) (courtesy of inflationdata.com), we can calculate the variable rate for the second 6 month period for October 2019 issue I Bonds.

That means these bonds would earn the current rate of 1.90% (using 0.5% fixed & 0.70% variable) for the first 6 months and 2.53% (combined 0.5% fixed & 1.01% variable) for the second 6 months. IMO, the current 1.90% rate doesn't really make an October purchase terribly appealing unless you believe that the 0.5% fixed portion (the highest in a decade) will go down next month. At this point, I don't think an I Bond purchase is compelling when compared to something like the 11 month CD @ 2.50% APY special currently being offered at Wheelhouse Credit Union.

Having already maxed out my 2019 purchase limit in January (as I did each of the previous two years), I can't act on these anyway. As always, I will continue to evaluate them and see what makes sense for me next year.