Can You Afford To Buy Treasury Bonds ?

With the Debt Ceiling debacle over, I was looking at the Treasury Yield Curve*. As of 08/03/2011, here are the following yields for US Treasury Notes;

1mo   3mo   6mo   1yr   2yr   3yr   5yr   7yr   10yr   20yr   30yr

0.00 0.00    0.00   0.00 0.33 0.52 1.25 1.94 2.64  3.55    3.89

Now, let’s add the BLS** inflation Rate. Bureau of Labor Statistics uses the Consumer Price Index to calculate the US inflation rate.

( June 2011) This number does not include inflation rate for Food & Fuel.

So, at the close of business, 08/03/2011, IF you purchased any Treasury Bond at any maturity other than the 30 yr, you are earning Negative Interest. If you purchase a 30 yr Bond, you are only earning 0.33% after adjusting for inflation. Factor in Food &Fuel inflation and all TBonds yield a negative rate.

In reality, not fantasy, if a TBond is purchased for a maturity of less than 30 years, you are paying the government to hold your money.

Think about the folks on fixed incomes...

* http://www.treasury.gov/resource-center/data-chart-center/interest-

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