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Old 04-05-2023, 01:16 PM   #1101
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As I stated a few weeks ago, while I posted all those 5%+ CD deals from 12-60 months, the spreads between CDs and treasury notes were unusually high and they would revert back to their normal 40 basis point spreads. Some banks needed to raise liquidity before the end of quarter so they "stepped in front of the line" to get their CDs sold with higher coupons. If you look at the issue sizes of each CD, they were pretty large. Investors are doing a lot of cash sorting now. They are moving money out of savings and checking accounts that pay next to nothing in interest and are moving to treasury money market funds and CDs. Investors were also selling into the equity market rally and exiting equity and bond funds last week and moving into money market funds. The surge in inflows into treasury MM funds is pulling short term yields down and the flight to safety trade is pulling intermediate and long term yields down. Remember that those bond traders that are locking in low long term yields are not risking their own money but "other peoples money". The market is once again betting that the Fed will cut interest rates starting in June despite all Fed members communicating that there will be no rate cuts in 2023. We will understand better where we are headed as banks start to report next week. The large banks were initial beneficiaries of depositors fleeing small and regional banks but they depositors are also doing their own cash sorting. Things will not stabilize for several months. We have a debt ceiling decision coming up and while there is no doubt that the debt ceiling will be raised, the country cannot continue to run with trillion dollar plus budget deficits. So there is a high probability that there will be another debt downgrade in the near future unless the market sees a serious effort to balance the budget. The probability of that happening is pretty low. A debt downgrade will push treasury yields up and CDs, and corporate bonds will follow.
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Old 04-05-2023, 02:23 PM   #1102
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Some of us slept through undergrad macroeconomics; Freedom56 sat in the front row and took notes!
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Old 04-05-2023, 02:27 PM   #1103
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You gotta get your sleep somewhere.
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Old 04-05-2023, 02:57 PM   #1104
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I slept through the one and only psychology course I took during my undergrad days. It was a complete waste of time.
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Old 04-05-2023, 03:26 PM   #1105
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Some of us slept through undergrad macroeconomics; Freedom56 sat in the front row and took notes!
Some of us even majored in it and found it "fun".
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Old 04-05-2023, 03:52 PM   #1106
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Some of us slept through undergrad macroeconomics; Freedom56 sat in the front row and took notes!
And we appreciate it!!
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Old 04-05-2023, 04:38 PM   #1107
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Very limited membership. Representative said these were NCUA insured.

Priority One CU Super 7 and Super 6 Term Certificates:

https://www.priorityonecu.org/

7% APY for 7-12 Months Ė Min balance $50k

6% APY for 6-24 Months Ė Min balance $25k

Membership Eligibility
Los Angeles County postal employees

Riverside and San Bernardino Counties postal employees

Everyone who lives, works, attends school or worships in the Santa Clarita Valley, San Fernando Valley and the City of South Pasadena

General Services Administration (GSA) (a Federal Government Agency) employees

Employees of the Providence Medical Group (St. Joseph Medical Center, Holy Cross Medical Center, Tarzana Medical Center & St. Elizabeth Care Center)

Employees of our many Select Employer Groups that offer membership as an employee benefit


That is good. My son is a GSA employee. Hmm
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Old 04-05-2023, 04:48 PM   #1108
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. Remember that those bond traders that are locking in low long term yields are not risking their own money but "other peoples money". The market is once again betting that the Fed will cut interest rates starting in June despite all Fed members communicating that there will be no rate cuts in 2023.
The main thing pulling bond yields down is the reduced inflation and signs of a slowing economy.

The bond investors should have been locking in long term yields 1) in Oct/Nov,or if they missed that then 2) in Feb, or if they missed that then 3) last week. The market does not care whose money it is. The rate direction is down and has been for some time. That is how it is until something changes.

The Fed tells the market when it will raise rates. The market tells the Fed when it will cut.

In the meantime, what are the best CD deals?
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Old 04-05-2023, 05:26 PM   #1109
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Anyone. How does a dollar bear market effect interest rates?
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Old 04-05-2023, 05:48 PM   #1110
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Here is the view from another Fed official today on Bloomberg.

Another one in the "one more hike and pause for a while" camp.

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Old 04-05-2023, 05:58 PM   #1111
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One more .25 hike then pause. Wall st doesn’t want to believe free money is ending. So they’re going to beg for more sugar.
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Old 04-05-2023, 06:01 PM   #1112
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Here is the view from another Fed official today on Bloomberg.

Another one in the "one more hike and pause for a while" camp.
That's what I've been thinking too... Assuming no other "crisis" pops up.
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Old 04-05-2023, 06:48 PM   #1113
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You know these Fed governors coming out with various talking points really just confuses the market. They would be better off leaving things to the major pronouncements. The Fed seems to always be talking as it is.
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Old 04-05-2023, 06:58 PM   #1114
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I bought 5.1 % 15 month CDs today. But I bought a half position. It’s that kind of party. Like Louis Rukeyser used to say “don’t just do something sit there”. But sometime it’s hard to do nothing. Although I’m trying. It takes practice
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Old 04-05-2023, 07:00 PM   #1115
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I bought 5.1 % 15 month CDs today. But I bought a half position. Itís that kind of party. Like Louis Rukeyser used to say ďdonít just do something sit thereĒ. But sometime itís hard to do nothing. Although Iím trying. It takes practice

Donít think that was Louis Rukeyser. Although he was entertaining
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Old 04-05-2023, 07:04 PM   #1116
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Maybe it was Mark Twain or Roy Roger’s.
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Old 04-05-2023, 07:06 PM   #1117
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Saddle up pilgrim we’re buying CDs
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Old 04-05-2023, 07:08 PM   #1118
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Don't Just Do Something, Sit There: A Mindfulness Retreat with Sylvia Boorstein
Book by Sylvia Boorstein

Several finance gurus have borrowed the phrase.
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Old 04-05-2023, 07:10 PM   #1119
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I’m always borrowing something
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Old 04-05-2023, 07:11 PM   #1120
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When treasuries were paying over 5% and CDs were paying more then treasuries, doing nothing is a sin.
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