Inside the U.S. Treasury's $23 Trillion STRIPS Machine
The Plumbing of the Bond Market
While headline stock indexes capture everyday attention, the real plumbing of the global financial system runs through the U.S. bond market. A key part of this plumbing is the Treasury's STRIPS program—an acronym for Separate Trading of Registered Interest and Principal of Securities. This program allows institutional investors to dissect standard Treasury bonds, separating the periodic coupon interest payments from the final principal payment.
The result is a series of zero-coupon securities that trade at a discount and pay out a single lump sum at maturity. This offers precise tools for pension funds and insurance companies matching long-term liabilities.
Breaking Down the May STRIPS Report
The latest monthly report from the U.S. Bureau of the Fiscal Service reveals the massive scale of this program. As of the end of May, the total pool of eligible securities outstanding reached a staggering $23,312,484,477,000 (approximately $23.31 trillion). However, only a fraction of this eligible debt has actually been broken apart.
A massive $22,695,004,850,000 remains intact as standard, unstripped coupon-bearing bonds. Meanwhile, the active supply of stripped securities currently stands at $617,479,626,000. The report also shows that financial institutions reconstituted $24,297,807,000 of debt back into standard coupon bonds during the month, illustrating the active, two-way liquidity of the program.
Retail Yields Find a Steady Plateau
For individual savers, the Treasury’s recent rate updates point to a steadying environment for government-backed savings. The Bureau of the Fiscal Service set the yield for Series I savings bonds at 4.26%, down from a peak of 9.62% during the high-inflation period of mid-2022. This shift reflects a cooling macroeconomic backdrop, though it remains significantly higher than the 3.54% rate offered in early 2021.
Concurrently, Series EE savings bonds are earning a fixed rate of 2.40%. While Series EE bonds had been anchored at a rock-bottom 0.10% for years, they have climbed to offer a more competitive rate for investors willing to lock in funds for the long haul.
The Five-Year Shift in Retail Bond Yields
The retail bond landscape has undergone a major shift over the past five years, reflecting the broader trajectory of inflation and interest rates. Series I savings bonds, which are designed to protect purchasing power from rising prices, saw their rates spike to a record 9.62% in May 2022 before retreating. Since then, the yields have fluctuated, hitting 6.89% in late 2022, dipping to 3.11% in late 2024, and rising back to 4.26% in May 2026.
Conversely, Series EE bonds have seen a slow but steady upward adjustment. Historically fixed at a mere 0.10% in 2021 and 2022, Series EE yields climbed to 2.70% in mid-2024, before settling at 2.40% as of May 2026. This upward trajectory shows that while inflation-linked interest is easing, the baseline rate for long-term fixed savings remains elevated compared to the pre-inflationary era.
Sources: TreasuryDirect News, Bureau of the Fiscal Service May 2026 Report.
