US Treasury announces new Series I bond rate of 3.98% for May-October

The US Treasury department announced on Wednesday that new Series I savings bonds that would be purchased between May 1 and October 31, 2025, will pay an annual interest of 3.98%.

That number replaces the 3.11% rate from the last six-month cycle. The new rate includes a 2.86% inflation-based portion and a 1.10% fixed rate, which the Treasury also confirmed is a step down from the 1.20% fixed rate set in October.

According to the US Department of the Treasury, these bonds update their interest structure every May and November, combining a variable and a fixed rate into what’s called the composite rate—that’s the rate that actually determines what bondholders earn for six months.

The variable part reacts directly to inflation and remains steady for six months after the bond is bought, no matter when the next update happens. The fixed part stays locked in for as long as you hold the bond. And no, they still don’t tell anyone how they calculate it.

The current update marks a significant drop compared to the record high of 9.62% back in May 2022, when inflation was burning red hot. Even with the numbers coming down, the fixed portion of the rate might still look decent to people who don’t plan on selling these bonds anytime soon.

You lock in the fixed rate the day you buy it, and it never changes. That’s why some buyers still show up, even if the overall return looks weaker than it did two years ago.

Treasury explains how rate changes impact buyers and holders

If you’re holding onto I bonds already, you’re not getting the new rate right away. There’s a built-in six-month lag that depends entirely on your original purchase date. So let’s say you picked up bonds in March. For your first six months, you’ll get whatever the composite rate was when you bought in. After that, it updates using the new numbers. That’s what the Treasury says happens every May and November. But you’ll only see the new rate on your personal timeline—March 1 and September 1, in this case.

Here’s a specific example. You bought I bonds in March. Your composite rate for the first six months includes a 1.90% variable rate and a 1.20% fixed rate. Come September, your variable portion will climb to 2.86%, and your fixed portion stays locked at 1.20%. Together, that brings your updated rate to 4.06%. Again, it all depends on when you bought.

None of this is surprising if you’ve followed how the Treasury runs these updates. But while the bond changes were going public, other parts of the economy weren’t exactly thriving.

The Commerce Department dropped its first-quarter GDP numbers the same day. The US economy shrank by 0.3% during the first three months of 2025, capturing the early days of Donald Trump’s second term.

Peter Navarro, Trump’s trade advisor, brushed it off on CNBC’s Squawk on the Street. “We really like where we’re at now,” Peter said, reacting to the GDP drop like it was no big deal.

He added, “I got to say just one thing about today’s news, that’s the best negative print I have ever seen in my life.” Instead of seeing a problem, he pointed to what he called a 22% jump in domestic investment, saying that’s what mattered.

Peter said, “The markets need to, like, look beneath the surface of that.” His argument was that if you remove the inventory buildup and trade impacts from Trump’s tariffs, the economy was actually doing 3% growth. He didn’t mention inflation. He just doubled down on the positives and defended the administration’s strategy.

Investors weren’t buying it. Major stock indexes dropped during morning trading right after the GDP numbers went live. The Dow Jones fell more than 1,000 points on April 10, and the S&P 500 tanked 3.46% that same day. As of press time, the S&P 500 is down over 7% for the year.

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