Government bonds suddenly became a sexy investment US Treasury bonds are known as a super safe, super boring place to put your money. But the Series I Savings Bond got so popular last week, the surge in demand crashed the Treasury's website

The bond that broke the internet

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JUANA SUMMERS, HOST:

The hottest investment right now is government bonds. They have gotten so popular that would-be buyers crashed the U.S. Treasury's website this week. NPR's Stacey Vanek Smith went to see what all the fuss was about.

STACEY VANEK SMITH, BYLINE: For weeks, there has been news that government bonds are this super-trendy investment. My colleague Andrea Hsu and I wanted to see what was going on for ourselves.

ANDREA HSU, BYLINE: I still have not been able to bring up the website, just the error message with a little frowny face.

HSU: The bonds that are breaking the internet are Series I savings bonds. But they require, like, a year commitment. Andrea and I started smaller. Cheapest bond out there - a four-week bond. We would each put in 50 bucks of our own money. The place to buy them - treasurydirect.gov.

I am now trying to open an account, and it's thinking. The site can't be reached.

(LAUGHTER)

HSU: I'm a little worried.

VANEK SMITH: David Enna covers bonds for tipswatch.com. He says this is not normal.

DAVID ENNA: Treasury Direct is locking up because everybody's trying to buy up bonds at the last minute.

VANEK SMITH: Is that right? Is this because everybody's buying Treasuries?

ENNA: It is. Yeah. They've become very hot.

VANEK SMITH: Very hot - words that have literally never been used to describe U.S. government bonds. A bond is essentially a loan. You lend the government, say, a hundred bucks. And after four weeks or six months or 10 years, depending on which bond you buy, the government will pay you back, plus a little interest. U.S. government bonds are considered to be one of the safest investments in the world, basically zero risk - and basically zero reward up until recently. Alexis Leondis is a columnist for Bloomberg.

ALEXIS LEONDIS: I mean, I think boring would be a totally accurate word. And really, like, for most, not really worth a look because rates were so incredibly low, like, less than 1% kind of low.

VANEK SMITH: Back in January, if Andrea and I spent a hundred bucks on a four-week government bond, we would have gotten a payout of about $0.05. Today, though, for $100, we will make almost $4. That's nearly 80 times the profit. Government bonds are giving investors the best payout seen in years - 4%, 5% - definitely better than the stock market right now, although still not enough to keep up with inflation. Which brings us to the thing breaking the internet, the I bond. These are adjusted for inflation, and they're paying out an interest rate of more than 9.6%. After today, that payout is expected to go down, hence the crashing website. Luckily, though, persistence pays off. At 6 p.m., after seven hours of trying, Andrea and I got to the purchase page.

Here we are. It's the site.

HSU: You got in. Let's do it.

VANEK SMITH: OK. Submit.

HSU: Here we go.

VANEK SMITH: Wait. No. No. Oh, my God. No.

(LAUGHTER)

VANEK SMITH: It crashed again. And maybe that's not so surprising. Pretty much all government bonds are seeing a big spike in interest from investors because they are paying out 10, 20, a hundred times more than they normally would, says David Enna.

This might be a really big question. Why have rates gone up so much?

ENNA: The Fed.

VANEK SMITH: The Federal Reserve was buying billions of dollars worth of government bonds every week as part of COVID stimulus to keep money flowing through the economy, but it has largely stopped doing that. With that demand gone and big buyers like China and Europe backing off, the U.S. is having to offer the highest bond payouts in decades, which has created kind of this golden moment. People can make a decent return on an investment that doesn't really involve risk, which means newfound hotness for bonds and a crashing Treasury Direct website. Andrea and I tried dozens of times all day that night. Spirits were low.

Around and around and around, still thinking.

HSU: I'm Not that hopeful anymore.

VANEK SMITH: It's crushed again.

Finally, 10 p.m. we got our bond. And apparently, we were lucky. The Treasury released a statement that its website just couldn't accommodate all the demand. Bonds are just too hot right now. Stacey Vanek Smith, NPR News.

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