Best CD, MM Rates & Bank Special Deals Thread 2023 - Please post updates here

[njhowie]

Quote:

Originally Posted by sengsational Today the 4 and 5 year inventory offered at Fidelity is down by half or more for the 3/23 dates, but they've added a bunch at 18 months.

The CDs are all being scooped up - there are only 77 issues to purchase right now. It was well over 100 yesterday, and around 200 some time earlier this week.

[mf15]

Yes getting nuts,at FIDO right now you can't build a 2 year CD ladder.
Oldmike

[Car-Guy]

^^^^^
Although the pick-ins have gotten slimmer today at Schwab (since I mentioned it in post 581 this morning), all maturities terms are still available out to 5 years.

[Montecfo]

Quote:

Originally Posted by Jimonlimon I'm looking at a CD ladder to cover 2-5 years out and trying to decide whether to buy now or wait until after the next Fed Open Market Committee meeting next week. For those who have tracked such things, do you think we will see a significant change in rates? Current available rates through SCHWAB mostly at JPMorgan bank Utah are: 2 yr 5.25% 3 yr 5.00% 4 yr 4.95% 5 yr 4.90%

I would suggest beginning now on the long end.

CD s yield quite a bit more than treasuries now. Not sure for how long.

Fed is less likely to be hawkish given banking situation. And those expecting higher long rates have been disappointed to date.

FWIW.

[NomDeER]

Quote:

Originally Posted by Jimonlimon I'm looking at a CD ladder to cover 2-5 years out and trying to decide whether to buy now or wait until after the next Fed Open Market Committee meeting next week. For those who have tracked such things, do you think we will see a significant change in rates?

Nobody can know the answer to this. I suspect that the CD rates being offered right now were established with the belief that the Fed would have a slight increase in rates in next week.

I bought a bunch of CDs over the past week simply because I think there's a fairly good chance there won't be many available after the end of the month and the settlement dates are awfully close to the end of the month.

When there weren't very many CDs available at the very end of last year and earlier this year - and even fewer non-callable or longer than 18 months - a Vanguard rep told me that this was common for that time of the year and banks tend to sell CDs to raise funds at certain times of the year. I was told that there likely would be more available at the end of the first quarter and that turned out to be true. I don't have confidence that there will be as many good CDs available next month, but I could be very wrong.

[11522914]

Quote:

Originally Posted by audreyh1 Unlike banks, there are no early withdrawal penalties on CDs bought through a broker and no way to get an early withdrawal from the issuing bank. You have to sell your brokered CD through the secondary market if you want our early. That is a benefit of buying directly from a bank along with allowing interest payments to stay in the CD.

One benefit of buying brokerage CDs are if interest rates have dropped when you have to sell it, you may have to pay an early withdrawal penalty (loss) on your bank CD but could potentially make a capital gain (profit) on your brokerage CD.

But if rates have risen when you have to sell your brokerage CD you will sustain a loss and a significant one if rates rise quickly.

[ShokWaveRider]

I thought the whole object of CDs was keeping them till maturity. At current rates I think one is protected. Not worth selling for .5% or even .75% if one is getting 5.25% or better.

[11522914]

Quote:

Originally Posted by ShokWaveRider I thought the whole object of CDs was keeping them till maturity.

Correct. I was providing examples if for some reason you had to liquidate your CD prior to maturity.

[Chuckanut]

Quote:

Originally Posted by ShokWaveRider I thought the whole object of CDs was keeping them till maturity. At current rates I think one is protected. Not worth selling for .5% or even .75% if one is getting 5.25% or better.

It is. But reality has a way of raising its head and having a good laugh at the best plans of we mortals. Just ask the guys and gals at the former Silicon Valley Bank.

[audreyh1]

Quote:

Originally Posted by ShokWaveRider I thought the whole object of CDs was keeping them till maturity. At current rates I think one is protected. Not worth selling for .5% or even .75% if one is getting 5.25% or better.

You can certainly run a calculator to check. Depositaccounts.com has a good early withdrawal calculator for bank CDs with known early withdrawal penalties.

[Jimonlimon]

Quote:

Originally Posted by Jimonlimon ... Current available rates through SCHWAB mostly at Morgan Stanley (EDIT-Corrected from JPMorgan) bank Utah are: 2 yr 5.25% 3 yr 5.00% 4 yr 4.95% 5 yr 4.90%

I ended up buying 2 & 3 year CD's at the above rates. I plan to buy more for years 4 & 5 but need to sell some bond funds first- maybe in a couple months.

[Car-Guy]

^^^^
I hope those rates hold for a couple of months. A lot depends on what Powell does next week.

[Brook2]

Quote:

Originally Posted by njhowie The CDs are all being scooped up - there are only 77 issues to purchase right now. It was well over 100 yesterday, and around 200 some time earlier this week.

Being someone new to understanding CDs, do you think this buying spree is because of the Fed meeting next week? If so, why wouldn't people be more interested in waiting since rumors are the fed will raise rates (or at least I doubt they would lower them)? Just curious about CD behavior.

[njhowie]

Quote:

Originally Posted by Brook2 Being someone new to understanding CDs, do you think this buying spree is because of the Fed meeting next week? If so, why wouldn't people be more interested in waiting since rumors are the fed will raise rates (or at least I doubt they would lower them)? Just curious about CD behavior.

I think it's simpler than that. Interest rates have been imploding all week long with the uncertainty in the banking sector along with volatility in the equity markets. Risk off. Folks looking for safety immediately.

[Winemaker]

I just wished First Republic asked me to make a $30 billion deposit. Do you realize how hard and time consuming it is laddering that much cash at Fidelity. Not much time for wine drinking, let alone making.

[sengsational]

Quote:

Originally Posted by sengsational Today the 4 and 5 year inventory offered at Fidelity is down by half or more for the 3/23 dates, but they've added a bunch at 18 months.

The 4 year inventory for the 3/23 date is still there. In fact, they added a bunch more 4 year Morgan Stanley. The 18 month duration CD's were sold or pulled. There's a smattering of smaller bank 5 year CD's, some higher than the 4.9% that the larger banks were offering. Certainly slimmer pickins than earlier in the week. I guess you can still order these on weekends since all you're doing is putting dibs on them (the transaction happens later). Not that I'm buying, as I have pretty much completely filled my bond allocation. I've just got a dribble left that I'm saving in case long rates turn very favorable; I want to be able to say "yeah, I got some of that back in the spring of 2023". I might not then go into the details that it was negligible amount .

[Car-Guy]

^^^^^
I didn't expect to see any new CD's to be added over the weekend. But based on your post, I checked at Schwab... Sure enough there are fewer today than yesterday. Still several are available for every maturity term but not as many as a few days ago. I do expect to see many more added next week but it will be interesting to see if they start popping up before or after Powell speaks.

[Freedom56]

Quote:

Originally Posted by Winemaker I just wished First Republic asked me to make a $30 billion deposit. Do you realize how hard and time consuming it is laddering that much cash at Fidelity. Not much time for wine drinking, let alone making.

With that much cash, your risk free options are limited to treasuries.

[copyright1997reloaded]

Quote:

Originally Posted by Brook2 Being someone new to understanding CDs, do you think this buying spree is because of the Fed meeting next week? If so, why wouldn't people be more interested in waiting since rumors are the fed will raise rates (or at least I doubt they would lower them)? Just curious about CD behavior.

The run on SVB provided us with a short term opportunity where the spread between CD's and similarly dated treasuries increased (pretty dramatically). I believe this is because of several reasons, some of which have been addressed in the forum.

1) As Freedom56 has mentioned, inventory of brokered CD's is not instantaneous. Thus, offerings and pricing for some were likely set prior to the SVB failure and resulting craziness.

2) We retail buyers are small fish in a large pond. With SVB and other issues, the big fish (companies payrolls, money in non-treasury mm funds, etc.) who are over FDIC limits are running to the hills, i.e. pulling assets from a variety of regional banks. For example, looking at Schwabs SWVXX fund holdings from 2/23/23, and picking one randomly, they had a 5.05% Bank of Nova Scotia (Houston Branch) CD (CUSIP 06417MZH1) for $297 MILLION dollars. There is no way that they can spread these investments into FDIC insured holdings (250K per institution). So some of this kind of money (I have no idea what SWVXX is doing) has been moving to the only quick-to-purchase "ultimate" safety purchase - short duration US Treasuries.

3) So the movement of BIG money from uninsured bank deposits (see above) into Treasuries causes two things: Increased demand for Treasuries (and thus higher prices/lower yields) and decreased demand for holdings in regional banks. Thus, those banks need to replace that (and quickly) otherwise they will need to sell their holdings (e.g. MBS, loan portfolio, perhaps longer dated US Treasuries) and that will force them to mark to market those holdings (and that will force them to account for losses on previously HTM items). One way they can keep sticky deposits is via those attractive rates on CD's (especially brokered as they can more easily fill the pipeline).

Given all of the above, we've gotten over the last week or so a great opportunity to snatch up CD's at rates with a good spread above Treasuries. Whether that is done or not - who knows? The new Fed lending facility allows them to take assets they already have and to lend them to the Fed AT PAR, which would help to a) alleviate their need to raise funds and b) potentially assure their depositors that their deposits above the 250K limit are safe. Both of these factors would reduce their demand for CD deposits. Potentially offsetting this would be fears regarding banks in general and in particular how good the FDIC insurance system is/would be if the situation got a lot worse. (That is, while most on this forum have expressed a view that FDIC insured deposits was just as good as treasuries, a minority of us have expressed the view that there was some (small) additional risk w/FDIC vs. owing a US debt obligation directly (US Treasuries).

For my own self, I bought a bunch of CD issues over the last couple of weeks, and even sold some appreciated Treasuries to help finance them. So, in my case, I think the spread on CD's-Treasuries was well worth it.

[erkevin]

Myself, Car-Guy, and probably a few others would like to make a polite request for all of you to quit buying all of the multi-year, non-callable, 5+% CDs and leave some for us (pretty please!).