But don’t go to your local mega bank. Look for better deals.
By David Enna, Tipswatch.com
For years, CD rates offered by banks and credit unions — even the aggressive online versions — have been stubbornly lower than rates paid on short- and medium-term U.S. Treasurys.
Less than a year ago, in July 2022, I noted that Treasury bills had a nice advantage in yields over CDs, with the 1-year yielding 2.79% versus about 2.0% for best-in-nation bank CDs. When I came back to this topic in September 2022, the 1-year was up to 4.03%, much higher than the best bank CDs at 3.1%.
Now this has changed. The U.S. banking system has been roiled by two major bank failures in recent weeks, an event that followed months of deposit outflows from banks to higher-yielding Treasurys and money-market funds. This is from a recent USA Today article:
With some jittery depositors shifting their money from regional banks to large ones, at least some banks are lifting their savings account and CD rates to incentivize customers to stay put or to attract new money to replenish reserves, analysts say.
“It’s likely that concerns about maintaining deposit levels have put upward pressure on some deposit rates at some banks,” says Ken Tumin, founder of DepositAccounts.com, which tracks bank savings and CD rates. Banks, he says, want to “shore up their deposits to reduce the odds of being hurt by a bank run.”
In this current climate, banks and credit unions are looking to build up deposits and many are aggressively promoting attractive CD rates. For example, this offer from N.C.-based Truliant Federal Credit Union has been appearing in full-page ads for several days in The Charlotte Observer.
My wife and I happen to have a small savings account at Truliant (a remnant from ages-ago CD offers) and so I thought: “Why not?” Within a day, we had nabbed the 23-month CD paying 5.35%. I was especially interested in this offer because of the longer term, 23 months. My thinking: It’s possible we have reached a peak in U.S. interest rates. If that’s true, I want to lock in good rates for a longer term.
Another positive … this is proof that newspaper advertising still works.
Let’s take a look at the current state of shorter-term interest rates, across all the safe options. I’ll use this Truliant offer as an example for 1- and 2-year CDs, but you probably can find slightly higher rates around the nation.
- 2-year bank CD: 5.35%
- 1-year bank CD: 5.35%
- 26-week Treasury bill: 4.94%
- 13-week Treasury bill: 4.85%
- 4-week Treasury bill: 4.74%
- Vanguard Treasury Money Market: 4.70%
- 1-year Treasury bill: 4.64%
- 5-year bank CD: 4.50%
- 2-year Treasury note: 4.06%
- 5-year Treasury note: 3.60%
What’s interesting is that shorter-term Treasury yields have been falling 50 basis points or more over the last month, at the same time CD rates are rising. The yield on a 2-year Treasury note, for example, fell from 4.89% on March 1 to 4.06% on March 31. Here is a chart showing the two-year yield trend for 2- and 5-year Treasury notes, showing the recent declines at a time of rising CD rates:
How to find up-to-date offers
One thing for sure: You have to be picky when investing in CDs. For example, Bank of America is currently paying 0.03% for a 1-year CD. (And this offer is only good through April 2! Thanks for the April Fool’s joke, BofA.) But the sad thing is that Chase and Wells Fargo are offering even less: 0.01%. These monster-sized banks don’t want or need your money.
So, where to look for something better? In the “old days” I would go to BankRate.com to find CD and savings rates. I still use it at times, but a better option is DepositAccounts.com, which does a great job of presenting unbiased information. For example, on its homepage, you can learn that the top 1% of 1-year bank CDs are paying 5.17% and the national average is 2.87%.
Here is information I found on Friday for best-in-nation 2-year CD rates.
Are credit unions off limits?
Note that several of the higher-paying institutions are credit unions, which can present tricky problems in opening an account. Ken Tumin of DepositAccounts.com notes: “All credit unions are required to have a field of membership which defines a common bond for members.” But for many institutions, which Tumin calls “all-access credit unions,” there are ways of “joining the club.”
Tumin has compiled a list of these all-access credit unions, along with information on how you can qualify.
Read the fine print
Many attractive bank and credit union CD offers will have minimum investment limits and most will have early withdrawal penalties. In the case of the Truliant offer, the minimum investment was $10,000, which had to be new money coming into the credit union. Here are Truliant’s early withdrawal penalties, which look standard:
- Term of at least 7 days but less than 12 months: 90 days of dividends or dividends since opening/renewal, whichever is less
- Term of at least 12 months but less than 48 months: 180 days of dividends or dividends since opening/renewal, whichever is less
- Term of 48 months or longer: 365 days of dividends or dividends since opening/renewal, whichever is less
What about brokered CDs?
In recent months I’ve had several readers report they’ve found great deals on brokered CDs, which are purchased through a brokerage instead of directly from a bank. These are tricky investments, because many offer great rates but are callable after a short period of time. Also, these investments do not reinvest the interest, so there is no compounding over time.
It takes hunting to find good deals. For example, here are the best brokered CDs available on Vanguard’s trading platform on Friday morning. None of these are particularly attractive, and the top two 5-year CDs are callable after several months.
Brokered CDs have the same FDIC insurance as any direct issue from a bank, up to $250,000 per bank (or whatever the Fed decides this week.) This makes brokered CDs particularly attractive for high-wealth investors, because they can spread $250,000 investments across many banks without opening individual accounts. Plus, there is a secondary market for the CDs and no penalty for exiting early.
The hassle factor is lower with brokered CDs. I understand the appeal. The reason the Truliant offer was attractive and easily available was: We already had an account there. Would I have been willing to open a new account elsewhere? Maybe not.
State income taxes
If you live in a state with a high tax on income, realize that the tax will reduce a CD’s yield advantage over a U.S. Treasury, which is free of state income taxes. That won’t matter in a tax-deferred account, however.
Final thoughts
Over the last decade-plus of ultra-low interest rates, at times I was able to leap into 5-year CDs paying 3%. I considered those major investing victories. Now I’d really like to find a 5-year CD paying 5% or higher. No luck. So I grabbed the 23-month CD last week. It’s not a life-changer, but getting 5% on my money just feels good.
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Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear.Please stay on topic and avoid political tirades.
David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.
Treasury Inflation-Protected Securities 
Very interesting post, thanks David. What happens if you need to sell your New Issue Brokered CD before maturity? Do you need to sell it in secondary market or the brokerage firm will reimburse it right away with no penalty?
I have never done this, but I am assuming you would need to put it up for sale in the secondary market.
With the brokerage firm I use, it must be sold on the secondary market. Select the brokered CD you wish to sell, click on TRADE, click on SELL, enter the qty you wish to sell. Usually, within a couple of hours, I get an email response with an offer to buy price. I can either accept it and sell my CD, or just ignore it if I don’t like the offer. If new, current interest rates are equal to, or higher, than your brokered CD is paying, the offer will be for less than what you paid. But, in my experiences, the loss is far less than what the early withdrawal penalty would be for the same situation with a direct bank or credit union CD.
Missed the 5 year CD in November at 5%. Saw CDs go to 4.9% a few weeks ago. Immediate after the Fed increase in March, CDs dropped to 4.75% for 5 year. Bought. Next day, City National through Vanguard/Fidelity sold CDs at 5%. Sold like hotcakes. They did it three times! Anyway. Happy with 4.75% for 5 years now that rates are down to 4.4% and 4.0%.
Those 5yr 5% non-callable CDs are out there. Last week on Mar 28-29, City Natl Bank had 5-6 millions worth of brokered CDs on sale on Fidelity (cusip 178180GY5). While I was double checking if they were non-callable and FDIC insured, ppl were buying up all of the millions of CDs. I quickly grabbed some and within 30mins there were all sold out. Hahaha, so they do exist, but not for very long.
Just want to share
I found a non-callable 5 years CD @ 4.45 (look like a new issue)
CIBC Bank USA IL 4.45% CD 04/13/2028
12547CAX6
It only has inventory at TDA and Schwab not Fidelity or ML
There are 3 States not available Georgia, Illinois, Wisconsin (Blue Sky Law)
I just bought a bit of that CD. Schwab is also showing an almost identical non-callable 4.55% 3-year, 12547CAZ1, from the same issuer.
Things I do, which are sometimes different from Mr. Enna’s fine article:
Buy CDs only at a brokerage. No fee to buy. Almost all longish term CDs bought at banks or credit unions have draconian early withdrawal penalties. You don’t have these at a brokerage (a small fee is charged if you want to sell a CD). Everybody hopes to hold to maturity, but stuff happens and sometimes you need the money. Also some banks (like Ally) do not allow partial withdrawals from a CD (you have to close the CD if you want any money out of it before maturity, and of course, pay an early withdrawal penalty).
Never buy a callable CD. The idea behind a CD is to lock in a good rate for a longish time period. Callable CDs defeat this purpose. Schwab only lists non-callable CDs on its CD Trade page (if you really want to, you can still buy callable CDs there). Vanguard mixes the two types so you have to sift through them to get only non-callable CDs.
Buy Treasuries only at a brokerage. There is no charge to buy or sell at Schwab or Vanguard. I buy at auction date. If you buy them at Treasury Direct, and want to sell before maturity, you have to transfer them to a brokerage account. Also Treasury Direct’s website is something out of the 1970s, kind of amusing if you like retro stuff.
To me short-term Treasuries are not 2 year Treasuries. I only buy 3, 4, or 6 month Treasuries, which is my definition of short-term. I sort of ladder them. They also pay the highest Treasury rates. Remember that interest on Treasuries is state tax-free.
I buy brokered CDs for longer terms, like 2 to 5 years. These are paying much higher rates (for now) than corresponding 2 to 5 year Treasuries. But right now yields for 3 to 5 year CDs are too low for me. I bought a 3 year CD at a brokerage last week at 4.8% (PCE came in a little low). I am not going to quibble too much as 4.8% is pretty much the same as 5.0%.
Brokered CDs do not compound interest. No big deal. Take the interest (usually monthly or semi-annually) and immediately move it into a high yielding brokerage money market account (SWVXX 4.69%, or VMFXX 4.77%). (Note: at Schwab you should keep all your money out of its cash (or settlement) account because it pays only around .4% or so. People doing this now are causing some problems for Schwab. It is called “cash sorting”. Schwab makes a lot of money from its cash account.)
When inflation cools (if it ever does), move into longer term CDs. I put a chunk of my money into longer term CDs when the PCE or CPI comes in lower than expected. But remember the Fed is interested in services inflation, which is still hot.
Use bank savings or checking accounts only to pay bills, for direct deposit, and for automatic (recurring) payments. If the bank savings or checking accounts get too big, ACH the money over to SWVXX or VMFXX. Do the reverse if the bank accounts get too small. ACH happens overnight for all my accounts.
This is a fun time to be a saver. Find out what rate you are happy with. A few months ago I said I was happy to get 4 percent. That has moved up to 5%.
Excellent commentary, thanks. One oddity on the Truliant offer is its claim that you can “add to certificates during its term.” I was able to do that on a previous CD with them, even after interest rates fell. Not totally sure that applies to this one.
David,
“Term of at least 7 days but less than 12 months: 90 days of dividends or dividends since opening/renewal, whichever is less Term of at least 12 months but less than 48 months: 180 days of dividends or dividends since opening/renewal, whichever is less”-Truliant tiny print.
Yes, that add-on is something I have not seen elsewhere. But look at the early withdrawal penalties. Seven days to twelve months penalty is not bad, but 12 and more months the penalty is really bad. Note that the terms on the Special are “13 to 23 months”. 13 (not coincidentally just over 12) puts you into the bad penalty. Losing six months of interest on a 13 month CD is not something I would want to happen. Sure you probably will not need the money, but stuff happens in life. Also interest rates might be considerably higher in six months and you might want to close the CD. Whenever I buy a CD from a bank or credit union (something I no longer do), it was first about the rate, but second and just as important, it was about the early withdrawal penalty. I would also need to know if one could take partial withdrawals from a CD.
I like to help people out, just like you, so this is why I like to contribute to your fine website. I have been playing the CD and I-bond game for over twenty years, and the Treasuries game for over a year (no reason to do so when they were paying practically nothing). Still not sure about Tips. I am a big fan of Treasuries, it is fun to see multi-billion dollar banks trying to make the same decisions I am trying to make. It makes me laugh at those dopes at SVB buying long duration Treasuries at 2 percent a year ago. Maybe they had to.
-Patrick
Excellent stuff, Patrick. Those “dopes” at SVB were playing a game they thought was impossible to lose. So were their depositors. The depositors ended up being right. The dopes should lose their shirts.
Thank you for sharing Patrick.
I like your idea of sifting money around and was looking into the Prime Money Market you’re suggesting SWVXX 4.69% . The current yield is pretty awesome in comparison to my savings account at Discover. It is current 1% lower. I am curious as to how long would you hold your SWVXX before you decided to ACH the fund out to your bank savings or checking?
You also mentioned Brokerage CDs. Discover is current offering
12-month CD 4.5% APY with minimum $2500 deposit. Zero account fees. However, there is a penalty for early withdrawal of 3 months simple interest.
Thought?
HP
Keep as little money as possible in banks. Put the rest in a money market fund like SWVXX, VMFXX, or VUSXX. ACH it to your bank as you need it. Phone your bank to see how to do it. People are waking up to how banks have been taking advantage of them with their ridiculously low rates.
As I mentioned, I only buy brokerage CDs. I do not buy CDs offered by banks or credit unions (I used to). Bank CDs are too much trouble, too much fine print, too many restrictions. Usually you can get better rates at a broker. Make sure the CD is non-callable.
Thanks for your comment. I actually called Schwab a few months ago to ask about the cash account and they told me they don’t have something similar to Vanguard money market fund which I now find is untrue. I will have to look again at their website.
David,
Would very much like your opinion on GSEs. The delta in the interest rates between the similar term GSEs and other guaranteed products such as CDs and t-bills, notes, and bonds is substantial. GSEs carry implicit government guarantee and in my understanding exempt from state taxes? So, what gives?! Are there any hidden risks that I Shoule be aware of. Would like to build a ladder of GSEs in my retirement account. Admittedly, very hard to find GSEs with call protection. My attitude is I will take it whatever I can get now. What are the risks if I am prepared to hold them till maturity?
I know zero about these GSEs, which are generally federally-backed mortgage securities? I imagine there is *slightly* more risk with these versus a traditional Treasury or TIPS. But I just don’t know much about them.
Ally has an 11 month No Penalty CD paying 4.75% (no penalty means you can cash out your principal and all interest earned to date any time after 7 days)
If you want to stay short term in the hope of snagging higher rates (I don’t, I considered myself lucky to lock up 4.90% CDs for five years), this seems like an excellent choice
Pro Tip: I put almost my entire Ally Money Market into these No Penalty CDs. I broke it up into multiple small CDs, so that I can take what I need at any time and let the rest continue earning 4.75%, a full percent higher than Ally Money Market is paying
Plus, if rates go down on the Money Market, I still can get 4.75% for the next 11 months
I am a fan of these Ally no-penalty CDs and have used them several times in the past.
I’m pretty sure I’ve thanked you for your excellent articles and this forum, but just to be 100% sure, know that I truly appreciate your work
FYI – Last week, Ally reduced the rate on their NPCD from 4.75% to 4.35%. CIT raised the rate on their NPCD to 4.80%. I use them the same way that you do.
Thanks for that info, I have to pass it along to a group of friends to whom I recently recommended the Ally NPCD.
Glad I snuck in my own buying before they dropped the rate.
I wouldn’t expect CIT to keep their rate at 4.8% for very long.
David, Thanks for the helpful info on CDs. You seemed to imply that rates for brokered CDs tend to be lower than dealing directly with a bank or credit union, but I think that really depends on when you look and the term you are l0oking for. Right now, it seems like you can get a higher rate when dealing directly with a bank or credit union for 2 yr CDs, but the same isn’t true for 5 year or 3 month CDs. And the fact that dividends aren’t reinvested for a brokered CD can be a plus or minus depending on whether you want the money to spend or can use it to reinvest in something even better. Also, I noticed that many of the banks listed on depositaccounts dot com get pretty poor reviews for customer service from people who tried to open accounts and had various problems (taken with a grain of salt.) So, unless I am investing really large amounts of money, the advantage of brokered CDs that outweighs all other considerations for me is that it makes it quick and easy to switch from one investment to another depending on changing needs or market conditions, and it makes book keeping and tax returns simpler.
On a related note, there is a new 5 yr TIPS auction coming up in a few weeks. Currently, the real yield on a 5 yr TIPS is 1.20% while the best nomial rate on a 5 yr CD is around 4.80%. Any thoughts on how large the spread would have to be (inflation break even point) before you would favor the 5 yr CD over the TIPS? Thanks.
“You seemed to imply that rates for brokered CDs tend to be lower than dealing directly with a bank or credit union …”
No, the opposite was true until just a few weeks ago, when middle-tier banks and credit unions began scrambling for deposits. One thing I always find fascinating is that a bank like Wells Fargo will offer a 0.1% CD to its customers but also offer a 4.25% brokered CD, out of sight of its usual customers.
I do get the appeal of the brokered CDs. I hate opening new accounts.
On the 5-year TIPS: You are looking at a 5-year inflation breakeven rate of 3.6% on a TIPS vs bank CD. The CD is certainly competitive. I’ll still probably buy the 5-year this month, though.
I bought 5 year CDs with Call Protection through Fidelity less than two weeks ago
I got 4.90% (posted about it here at the time)
CALL PROTECTION IS AVAILABLE ON MUCH FEWER CDs NOW
Also bought 4yr CDs (with Call Protection) yielding 4.95%, 3 yr CDs yielding 5%
5yr CD rate (with call protection) is now down to 4.65%.
There will likely be a new batch of CDs available tomorrow, but likely with lower rates
1. Generally speaking, any benefit to buying 2 year treasuries by auction vs. secondary market? 2. Are all brokered CD’s bought through secondary market able to be sold through the secondary market? Thank you.
Am I missing something?
I can’t find links to the banks offering those good rates, and I can’t find them searching on Google. There are too many banks with similar names to these smaller banks
The only “links” I can find are to banks with lower rates on the right side of the page (CIT, CapitalOne etc). I’m guessing because those banks give DepositAccounts.com a commission
At DepositAccounts.com, if you click on the institution’s name it takes you to an information page which has a link to the website in the overview section.
Thanks, I missed that
After clicking on the link to the institution, I have to then search within the institution to find the CD I’m interested in.
Having written many websites, if I were programming this, I would have links directly to the individual CDs.
Roy,
1. To get the best price on a secondary Treasury, you generally have to buy a lot of them (100+). You can usually click on the Order Book to see the Ask for a smaller quantity. So, I usually buy mine at auction to avoid the spread.
2. You should be able to resell a secondary CD via your broker. However, the liquidity on some is really thin. So there might not be any bids. You can ask your broker to request bids, but they probably won’t be very good. You should plan to hold to maturity.
I agree with you about preferring auctions.
But as far as selling in the secondary market, you don’t have to hit bids or take offers.
You can make your own bids and offers. As long as they’re a sufficiently more attractive than the market (look at yields on similar maturities), you have a decent chance to be taken out.
About 2-3 weeks ago, I was able to sell 3 month – 3 year Treasuries in my Fidelity retirement accounts for a nice gain and purchase 1 – 5 year CD’s ranging from 5 to 5.4% yield. Score one for the brokerage account that makes it so easy to use the secondary market to trade Treasuries and CD’s. Sometimes I have to pinch myself to verify it’s not a dream; earning equal or higher yields than investment grade corporate bonds with less risky US Treasuries and/or FDIC insured products. Keeping score with my own simple spreadsheet – comparing my fixed income portfolio yield and duration of TIPS, ibonds, bank CDs, brokered CDs, and Treasuries to the big bond funds and the highest yield products via Fidelity’s fixed income page and depositaccounts.com.
Thanks for the awesome site David!
Great strategy! Glad it worked out for you. That’s definitely the main advantage of buying through a brokerage account – you can easily switch your investments as market conditions change.
Thanks for the info, David. I recently purchased a 5.5% 7 year MYGA with an A rated company. Nice to see the banks and credit unions are now competing.
Hi Pat,
It’s been many (35+) years since I took the Society of Actuaries exams Parts 3 and 4 (Theory of Interest, and Life Contingencies) and I’m having trouble figuring out why an insurance company would pay that high a rate. I never became an actuary (although I did related risk analysis and research work), but I’m used to thinking of annuities that pay high rates as returning part of your principal with each distribution, or life contingency where you get a high interest rate, but there’s nothing left for your heirs when you pass
If they’re guaranteeing that interest rate and full return of your principal, it’s a mystery as to why that would have to pay that high a rate (especially considering the tax advantages), and what they would invest the money in to be able to make a profit, including their expenses.
I suppose the fact they don’t have FDIC or a government guarantee might require them to pay more, but I’m still mystified.
Tax advantage is in the eye of the beholder…deferring income until the Trump ta cuts expire is not necessarily an advantage.
While MYGA’s do not have FDIC or NCUA insurance, consumer protection is provided by your “state insurance guaranty association.” For an annuity/MYGA to be covered, the insurance company must be a member of the association in your state of residency. Coverage rules and amounts vary by state. For instance, in Ohio, each spouse qualifies for up to $250,000 of annuity insurance protection.
As to why/how the MYGA rates are usually higher than CD’s: one reason could be that the early surrender penalties on most MYGA’s are 3-7 times higher than the early withdrawal penalties on direct bank and credit union CD’s. This could be a big money maker for the insurance companies.
I take the interest on my MYGA’s monthly or yearly, rather than compounding till maturity. If I wait to take the big interest payment at maturity, it will likely push me into the next tax bracket for higher monthly Medicare premiums (IRMAA).
I prefer brokered CDs for the reason you mentioned…low hassle factor. No interaction with bank/CU staff necessary, no email or regular mail solicitations, no need to track multiple bank accounts, no hoops to jump through for credit union membership, etc. Stuff like that matters to me.
Thanks for doing this review
I have a fair number of brokered CDs in my IRA. I would also encourage people to look at the secondary offerings on their broker’s website. Sometimes you find a individual who really needs to sell their 7 CDs (or some other small, random number) and you can pick them up at a good price. Also, good advice to look for Call Protected CDs.
Don’t accept any CDs that are NOT call protected
I checked with the FDIC about how FDIC insurance works on brokered CDs. They replied with a long message, it’s NOT the same as regular bank CDs. Your brokerage firm plays an intermediate role, I suggest you contact the FDIC, their reply is too long to post here
And remember, you still are limited to a $250K limit on the TOTAL face value of CDs at any one bank.
How complicated can it be ?
I found this , dated some years ago , but should still be the case
“If you buy a CD directly from a bank and it fails, you will receive an insurance payment faster than you would if you purchased it through a broker. With brokered CDs, the FDIC must first obtain from the broker the name and deposit amount for each CD investor. Then the FDIC will send the deposit insurance check to the broker, who in turn is responsible for distributing the payment to the consumer, and that can result in further delays. Note that the FDIC does not supervise or become involved in the arrangements between brokers and consumers. “
“Sometimes you find a individual who really needs to sell their 7 CDs (or some other small, random number) and you can pick them up at a good price.”
When you search for those secondary offerings, are you ignoring yield/rate and just looking for the best discounted price? If not, how do you maximize that effort? Thanks, Tim.
Fidelity (and I assume other brokerages) show you the yield to maturity on both bid and ask sides, as well as the price.
Sample of their 1300+ secondary market CDs:
As for “how to maximize the effort,” I think it would be mind-numbing unless you know how to scrap and process webpages (which I do, using Selenium and Python for example). So thanks for the tip, lol
If someone “really needs to sell their 7 CDs,” I would imagine they’d hit a bid if one existed. So maybe a simple programming approach would be to look for CDs where there IS no bid and there’s a small offer
Thank you once again for the info. I had never bought a CD prior to this year. The depositaccounts site is mighty fine.
My local credit union (A-rated on Deposit-Accounts) is offering 18-84 month CDs – all at 4.5%, which seems a bit odd. I am OK with 60 months, but am I correct in thinking that 84 is probably the best deal – assuming I can tie up the cash that long?
You don’t see 7-year CDs very often, but I like that your credit union is providing the same rate for these longer maturities.
On my Schwab brokered CDs higher rate than short-term tbills. Been rolling CDs. Higher rates ahead, I’m staying short term.
I sincerely doubt that there are higher rates ahead.
The same 5 yr call protected brokered CDs I bought at Fidelity less than 2 weeks ago are now available down 25 basis points, from the 4.90% I got on my CDs to 4.65% today
CME FedWatch Tool is currently showing around a 50/50 chance that the Fed raises rates in May:
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
Understood. But I’m looking to lock in rates for 3-5 years.
I can get 4.75% on No Penalty 11 month CDs at Ally now that provide complete flexibility, I’m not worried about the last 0.25% that may only be around for the next 3-6 months
Go to your own link, click the tabs on top for where Fed Funds futures traders expect Fed Funds to be at the September and December meetings.
By September, there’s only a 9.7% chance Fed funds will be 500-525 and zero probability it will higher than that (compared to current 475-500)
By December, there’s a 64% probability Fed Funds will be A HALF POINT LOWER than they are now.
I think the odds are high the train has already left the station on peak rates. I finished my buying in CDs less than 2 weeks ago, CD rates are already down 25 basis points, and I expect another drop this week
It’s the rate number to the left of decimal, that makes a significant difference to me! I stay laddered short term until inflation is under Fed Funds or election year.
By then 4.5+% CD rates will be a memory, you’ll be lucky to get 3-3.5%
Look at how quickly the 2yr Treasury went from 5% to 4%
No yield for years, I can wait. My cash return has nothing to do with my plan, but a bonus for heirs. I do not sweat the small stuff.