Hello, YieldAlley readers! In this issue:
Should You Still Hold Your I Bonds?
Supreme Court Overturns Global Tariffs as PCE Inflation Hits Highest Level Since March 2024
Earn Up to $500 With a New Bank of America Checking Account
Which European Countries Pay the Highest Salaries
And more!
NEWS
Standout Stories
🏡 Early Mortgage Payments or Invest in the Stock Market? (A Wealth of Common Sense)
🥜 America’s favorite condiment isn’t ketchup — it’s peanut butter
(Sherwood)
📈 4 Warren Buffett Stocks to Buy From Berkshire’s New 13F (Morningstar)
📉 Berkshire was a net seller of stocks in Buffett’s final quarter as CEO (CNBC)
🛍️ What the Supreme Court’s tariff ruling means for the prices you’re paying (CNN)
MARKET THOUGHTS
Supreme Court Overturns Global Tariffs as PCE Inflation Hits Highest Level Since March 2024
ECONOMY
Q4 GDP growth decelerated sharply to an annualized 1.4% from 4.4% in Q3, driven by declines in government spending and exports alongside a slowdown in consumer spending. Core PCE inflation (the Fed's preferred gauge) accelerated to 0.4% month-over-month and 3.0% year-over-year in December, up from 0.2% and 2.8% in November, while headline PCE rose 2.9% year-over-year, the highest since March 2024. Fed minutes from the January meeting revealed division among policymakers, with some favoring further easing if inflation cools while others flagged the possibility of rate increases if price pressures persist. The S&P Global Flash U.S. Composite PMI fell to a 10-month low in February amid weakened demand, high prices, and adverse weather, though business expectations for the year ahead hit a 13-month high. Housing data was mixed: the NAHB homebuilder confidence index slipped to 36 on affordability concerns and pending home sales fell 0.8% in January, but housing starts beat estimates with gains of 3.9% in November and 6.2% in December.
STOCKS
U.S. indexes closed the holiday-shortened week higher, rallying Friday after the Supreme Court ruled to overturn the Trump administration's sweeping global tariffs. The Nasdaq Composite led gains at +1.51%, posting its first weekly advance since early January, while the S&P 500 rose over 1% to close at 6,909.51 and the S&P MidCap 400 advanced 1.22% to 3,606.95. The Dow Jones Industrial Average lagged, closing the week just 0.25% higher at 49,625.97. Escalating U.S.-Iran tensions added a layer of volatility, pushing oil prices higher during the week. Year-to-date, midcaps continue to lead with the S&P MidCap 400 up 9.13%, followed by the Russell 2000 at +7.33%, while the Nasdaq remains in negative territory at -1.53%.
FIXED INCOME
U.S. Treasuries posted negative returns heading into Friday as investors digested hotter-than-expected PCE inflation data and Fed minutes that struck a more hawkish tone than recent meetings. Investment-grade corporate bonds were little changed on the week but outperformed Treasuries, with new issuance generally oversubscribed, signaling continued strong demand for quality credit. High yield bonds advanced alongside the equity rally, supported by institutional demand and renewed optimism in the software sector following a recent stretch of weakness. The Supreme Court's tariff ruling on Friday likely provided a tailwind for risk assets heading into the close.
INCOME BUILDING TIP
Should You Still Hold Your I Bonds?
I Bonds were the darling of 2022 when they briefly topped 9%, but the math looks different today. The current composite rate sits at 3.11% (1.20% fixed + inflation adjustment), which trails 6-month brokered CDs at Schwab (3.84%), Fidelity (3.80%), and Vanguard (3.75%). Even money market funds like VMFXX (3.59%) and treasury ETFs like TFLO (3.57%) are outyielding I Bonds right now. And while I Bonds offer tax deferral until you sell, that benefit shrinks considerably once you actually cash out: at higher marginal tax rates, the real after-tax, after-inflation return on I Bonds purchased during the 2021-2023 window has worked out to roughly 2.6% annualized, barely keeping pace with inflation.
The $10,000 annual purchase limit per person is the other issue. Unless you started early and bought consistently across multiple accounts (individual, spouse, trust, business), most investors simply don't hold enough in I Bonds for the position to meaningfully impact their portfolio. There is a lesser-known "gift box" method on TreasuryDirect that technically allows unlimited purchases delivered at $10,000 per day, but it comes with its own complexity and could be closed at any time.
So what's the move? If you're holding older I Bonds with a high fixed rate component (anything above 1.0% fixed), those are still worth keeping since the fixed rate is locked for the life of the bond and compounds on top of the inflation adjustment. But if your I Bonds carry a 0% or near-0% fixed rate, which most bonds purchased between 2020 and mid-2023 do, it's worth running the math on redemption. You'll owe federal income tax on all accumulated interest at your ordinary rate, and if you've held for less than five years, you also forfeit three months of interest.
The question is whether the after-tax proceeds redeployed into a 6-month brokered CD at 3.84% or a money market fund at 3.59% would outperform holding the I Bond at 3.11% pre-tax over your expected time horizon. For many investors in higher tax brackets, the gap between 3.11% tax-deferred and 3.84% taxable is narrow enough that holding may still win, especially if you're close to the five-year mark. But if you're sitting on a small position that isn't moving the needle, simplifying your financial life by cashing out and closing the TreasuryDirect account may be worth more than the marginal yield difference.
INCOME BUILDING
Cash Rates
Government Money Market Funds (7-Day Yields)
SNVXX (Schwab Government Money Fund - Investor Shares): 3.41%
SPAXX (Fidelity Government Money Market Fund): 3.32%
TTTXX (BlackRock Liquidity Funds: Treasury Trust - Institutional Class): 3.55%
VMFXX (Federal Money Market Fund): 3.59%
Brokered CD Rates (6-Month Rate)
Charles Schwab: 3.84%
E*Trade: —
Fidelity: 3.80%
Merrill Edge and Merrill Lynch: —
Vanguard: 3.75%
ETFs (30-Day Yields)
SGOV (iShares 0-3 Month Treasury Bond ETF): 3.54%
BIL (SPDR Bloomberg 1-3 Month T-Bill ETF): 3.47%
USFR (WisdomTree Floating Rate Treasury Fund): 3.56%
TFLO (iShares Treasury Floating Rate Bond ETF): 3.57%
DEALS AND BONUSES
Earn Up to $500 With a New Bank of America Checking Account
Bank of America is offering up to a $500 bonus for opening a new checking account with qualifying direct deposits. The offer is available nationwide through their promo page, in-branch, or by phone. No complex hoops, just direct deposits within 90 days.
Offer Details
Main promotion: Up to $500 bonus for opening a new Advantage SafeBalance checking account
Promo code: None
Valid dates: Through May 31, 2026
Bonus tiers: $2,000 in direct deposits = $100; $5,000 = $300; $10,000+ = $500
Eligibility: New checking customers only; must not have owned or co-owned a BofA personal checking account in the last 12 months; fiduciary accounts and business accounts not eligible; one bonus per customer
Funding requirements: Set up and receive qualifying direct deposits within 90 days of account opening; bonus deposited within 60 days after the 90-day window
Key restrictions: Monthly fee of $4.95 (waived if under 25, $500+ daily balance, or Preferred Rewards member); $25 early account closing fee; cannot be combined with other checking offers
Our Thoughts
The $500 tier requires $10,000 in total direct deposits over 90 days, which works out to roughly $3,333/month. That's very doable if you can route a paycheck. The $4.95 monthly fee is easy to dodge with a $500 balance, so effective cost is essentially zero. If you're not eligible for the bigger Chase or Citi bonuses, this is a solid nationwide fallback with a low bar to clear.
Picture of the Week
