Consumer Sentiment

&

I Bonds

Consumer Sentiment Collapses to Near Record Low

The University of Michigan Consumer Sentiment Index fell to 50.3 in early November, down from 53.6 in October, one of the worst readings since the survey began in the late 1970s. Yes, even worse than most months during the 2008 crisis. Only the brief collapse in mid-2022, when inflation shocked almost everyone, came close. It’s a striking reminder of how heavy the public mood has turned. 

People are worried about prices again, about rates staying high, about whether the job market might finally crack. You can almost feel the fatigue setting in. And when sentiment drops to this kind of level, it usually takes time, sometimes years, for confidence to recover.

The 3 biggest drivers for consumer sentiment collapse: 

1.)  Residential real estate whether buying or renting affordability.

2.)  Sky high secondary educational costs causing massive student loans indebtedness.

3.)  Anything related to health care primarily the overall costs and growing understanding of fraudulent (fictitious) diseases and unnecessary treatments.  COVID SCAM is the primary example.

Series I Savings Bonds: Good Time to Buy?

How I-Bonds Pay Interest

I-Bonds combine two rates: a fixed rate (which does not change for the life of the bond) and an inflation rate (which resets every six months). For the issuance period from November 2025 to April 2026, the fixed rate is 0.90% and the inflation component rate (six-month rate) is 1.56%. These combine to give an annual composite rate of about 4.03%. That’s for this specific issuance period, mind you. The inflation piece will change in six months.

The fixed rate stays with you for the entire 30-year life of the bond. The inflation component adjusts every six months based on the CPI. 

Series I bonds have tax-deferred interest, meaning you can choose to defer paying federal income tax on the interest until the bond is redeemed or reaches final maturity. This allows the interest to continue earning interest for up to 30 years. The interest is also exempt from state and local income taxes.

Holding Period and Maturity

The bonds mature in 30 years, meaning you earn interest up to that point. But there are some restrictions. Restrictions:

• Have to hold at least one year
• If sell within the first five years, you forfeit the last three months of interest. 

Where to Buy

You purchase I-Bonds directly from the U.S. government via the Bureau of the Fiscal Service’s website, Treasury Direct. 

I-Bonds vs. Other Fixed Income: Good Time to Buy?

• Compared with Money Market: Money Market is more liquid. But it's not pegged with inflation (or at least not as sensitive as I Bond). 
• Compared with TIPS (Treasury Inflation-Protected Securities):

  TIPS are probably the closest comparison to I-Bonds. Both offer inflation protection. But the mechanics are different. Right now, a 10-year TIPS has a real yield of about 1.79% much higher than I-Bond fixed rate 0.9%.  But TIPs has downside: to sell before maturity, you might actually lose principal depending on market conditions. There is also tax headache for TIPs. 

DYI COMMENT:  With nose bleed levels for the U.S. stock market I Bonds is an saving/investment alternative for long term money.  Obviously this will depend upon the individuals financial planning needs.  

For those in the higher tax brackets with Federal taxes differed and exempt from State/Local taxes and zero market risk to principal it is an effective add on to any portfolio.

Simply knowing what exist and how they work gives you more ammunition to full fill your savings/investment goals.