Best CD, MM Rates & Bank Special Deals Thread 2022 - Please post updates here

[lordjust]

These are brokered CD's found on Schwab, Fidelity, Vanguard, etc. Not the bank.

purchased! appreciate the help

 

[11522914]

These are NOT AGENCY BONDS. (AAA rated, 5 year duration, 5%+ yield. 3133ENM72)

No gov agency backing.

Correct me if I'm wrong but these are FFCB bonds, which are GSE, which are Agency

 

[aja8888]

Correct me if I'm wrong but these are FFCB bonds, which are GSE, which are Agency

I went to the FFCB website and looked up these bonds. They clearly state they are not gov agency backed. These are issued by their member banks.

From the offer sheet:

https://www.farmcreditfunding.com/ffcb_live/cusipResults.html

THE SECURITIES ARE THE JOINT AND SEVERAL OBLIGATIONS OF THE BANKS AND ARE NOT OBLIGATIONS OF AND ARE NOT GUARANTEED BY THE UNITED STATES GOVERNMENT. THE SECURITIES ARE NOT REQUIRED TO BE REGISTERED AND HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED. IN
ADDITION, THE BANKS ARE NOT REQUIRED TO REGISTER OR FILE, AND DO NOT FILE, PERIODIC REPORTS UNDER THE U.S. SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

Download the PDF from the cusip link and see for yourself.

 

[Montecfo]

Correct me if I'm wrong but these are FFCB bonds, which are GSE, which are Agency

You are correct. It is also correct that they are not guaranteed by the government. But they carry the so-called "implicit guarantee" of the federal government.

That is how GSEs work.

 

[11522914]

You are correct. It is also correct that they are not guaranteed by the government. But they carry the so-called "implicit guarantee" of the federal government.

That is how GSEs work.

That was my understanding also. Thanks

 

[aja8888]

You are correct. It is also correct that they are not guaranteed by the government. But they carry the so-called "implicit guarantee" of the federal government.

That is how GSEs work.

Just curious, but is that spelled out in the offering documentation (I didn't see it specifically)? If not, what makes this backing a guarantee one can rely on?

 

[COcheesehead]

These are NOT AGENCY BONDS. (AAA rated, 5 year duration, 5%+ yield. 3133ENM72)

No gov agency backing.

They are agency bonds, you may be confusing them with treasuries.

 

[COcheesehead]

Great rate. These are callable. I'm curious, have you had any experience with these types of agency bonds being called? Do they ever get called?

Is there any way to research previously called bonds?

TIA

Calls are a crap shoot. You never know therefore buy on yield to worst and don’t worry about something you can’t control. There’s always another good bond to buy. I’ve been buying bonds for years. There’s always a deal somewhere.

 

[Earl E Retyre]

Today, I purchased on Vanguard a noncallable, 5 year, 4.3% brokered CD with Capital One.

 

[Car-Guy]

Today, I purchased on Vanguard a noncallable, 5 year, 4.3% brokered CD with Capital One.

Looks like all (or many) of the big brokers have the same CD's to offer. I see the exact same CD available through Schwab right now.

 

[Montecfo]

Just curious, but is that spelled out in the offering documentation (I didn't see it specifically)? If not, what makes this backing a guarantee one can rely on?

No, as that would make it explicit. It is a characteristic of GSE issues aka agency bonds. You can google and read about it, but it in essence it is the belief that government would likely not allow these to default in most cases. See the bailouts of Fannie and Freddie for example.

 

[11522914]

See the bailouts of Fannie and Freddie for example.

Great example. Imagine the mess that would have been if they didn't get bailed out.

 

[teej1985]

Looks like all (or many) of the big brokers have the same CD's to offer. I see the exact same CD available through Schwab right now.

Why would it be different?

 

[audreyh1]

Those money market funds rates start moving up really fast after the Fed raises their Fed Funds rate!

 

[bpgdeg1234]

Today, I purchased on Vanguard a noncallable, 5 year, 4.3% brokered CD with Capital One.

I have a 5 year ladder and recently bought the PenFed 3.5% CD they offered in July. In seeing this Capital One 4.3% 5 year CD I initially decided to jump on it as well but am now questioning whether it makes sense with the Fed very intent on continuing to raise rates at least into 2023 and likely further.

As such, I'm starting to doubt this decision (which I can easily cancel) as thinking it may be more prudent to decrease duration at this point and hopefully reinvest at higher rates.

On the other hand, I do have two other CDs/treasuries scheduled to mature in Nov and Dec of this year so I can take advantage of any additional interest rate increases at that point and be sure to lock-in 4.3% for 5 years now.

Thoughts?

 

[PatrickA5]

Those money market funds rates start moving up really fast after the Fed raises their Fed Funds rate!

Yup! Should be pushing 3% after this latest round.

Unfortunately, they fall fast too.

 

[audreyh1]

Yup! Should be pushing 3% after this latest round.

Unfortunately, they fall fast too.

Well, I really don’t think that is going to happen anytime soon.

 

[bpgdeg1234]

I have a 5 year ladder and recently bought the PenFed 3.5% CD they offered in July. In seeing this Capital One 4.3% 5 year CD I initially decided to jump on it as well but am now questioning whether it makes sense with the Fed very intent on continuing to raise rates at least into 2023 and likely further.

As such, I'm starting to doubt this decision (which I can easily cancel) as thinking it may be more prudent to decrease duration at this point and hopefully reinvest at higher rates.

On the other hand, I do have two other CDs/treasuries scheduled to mature in Nov and Dec of this year so I can take advantage of any additional interest rate increases at that point and be sure to lock-in 4.3% for 5 years now.

Thoughts?

Any takers?
Thanks

 

[erkevin]

I am purchasing nothing beyond a 1 year duration for two reasons; first, as discussed previously, the Fed is going to raise rates several more times, so CD rates are going to go higher. Second, the difference between a 1-year rate and a 3+ year rate is negligible meaning I gain very little purchasing a 3 or 5 year CD. I am in no fear of missing out because the rates suddenly drop (not going to happen). My sweet spot is going to be between 4.5 and 5% in order for me to purchase longer-duration CDs.

 

[Car-Guy]

As such, I'm starting to doubt this decision (which I can easily cancel) as thinking it may be more prudent to decrease duration at this point and hopefully reinvest at higher rates.

Thoughts?

+1 That's what I'm doing... 3 to 18mo ladder.

 

[Earl E Retyre]

I have a 5 year ladder and recently bought the PenFed 3.5% CD they offered in July. In seeing this Capital One 4.3% 5 year CD I initially decided to jump on it as well but am now questioning whether it makes sense with the Fed very intent on continuing to raise rates at least into 2023 and likely further.

As such, I'm starting to doubt this decision (which I can easily cancel) as thinking it may be more prudent to decrease duration at this point and hopefully reinvest at higher rates.

On the other hand, I do have two other CDs/treasuries scheduled to mature in Nov and Dec of this year so I can take advantage of any additional interest rate increases at that point and be sure to lock-in 4.3% for 5 years now.

Thoughts?

I go through this same thought process. I have FOMO (Fear Of Missing Out) in both directions. If I lock in 4.3% for 5 years and then rates go up to 5.3%, I will be annoyed. If I do not lock in 4.3% for 5 years and then rates go back down to 3.3% I will be annoyed. I think I would be more annoyed if the latter happens. If I can get 4+% long term, I am all set. At the same time, since interest rates will probably hike at least one more time, there is a decent chance rates will go up again. So, I decided to buy some at 4.3% and then watch the offerings. If I see a noncallable at 4.75% I will buy again. I think once I see 5+%, I will go all in and not look back.

 

[John Galt III]

I am thinking of getting a brokered $10,000 CD at Vanguard.

The rules for fees and commissions are unclear. It implies on one page that I will be charged $1 transaction fee per $1,000 of investment.

On another page it says that 'commissions' will be charged on secondary market buys (CD's are on secondary market) but nowhere is the percentage of the commission specified.

Are they conflating 'fee' and 'commission' ?

As of now, their wording has me thinking I will be paying a fee of $1 per $1,000 and ALSO a commission of some unknown amount.


Their wording about the $1 fee per $1,000 is clear, but not the commission rules.

Here's the wording for the commission part:

<< Vanguard Brokerage Services may act as one of the following:

An agent, executing your order at cost plus a commission.
A principal, adding markeup to purchase prices or subtracting markdowns from sale prices.** When acting as a principal for a primary market issue, Vanguard Brokerage generally receives a fee concession from the issue. >>

Would be good to know my fees and commissions before buying the CD.


Thanks

 

[bpgdeg1234]

I go through this same thought process. I have FOMO (Fear Of Missing Out) in both directions. If I lock in 4.3% for 5 years and then rates go up to 5.3%, I will be annoyed. If I do not lock in 4.3% for 5 years and then rates go back down to 3.3% I will be annoyed. I think I would be more annoyed if the latter happens. If I can get 4+% long term, I am all set. At the same time, since interest rates will probably hike at least one more time, there is a decent chance rates will go up again. So, I decided to buy some at 4.3% and then watch the offerings. If I see a noncallable at 4.75% I will buy again. I think once I see 5+%, I will go all in and not look back.

Thank for everyone's perspective. Fixed income ugh!

 

[Drake3287]

I am purchasing nothing beyond a 1 year duration for two reasons; first, as discussed previously, the Fed is going to raise rates several more times, so CD rates are going to go higher. Second, the difference between a 1-year rate and a 3+ year rate is negligible meaning I gain very little purchasing a 3 or 5 year CD. I am in no fear of missing out because the rates suddenly drop (not going to happen). My sweet spot is going to be between 4.5 and 5% in order for me to purchase longer-duration CDs.

I generally agree with you but I think many people forget about simply paying an early withdrawal penalty. Many times it’s a wiser choice once you run the numbers.

Currently I have an Ally CD at 2% but the second it hit’s 3.25% in the coming days I’ll be paying that 60 days of interest. Same for several of my other CD’s.

 

[Dave J]

I generally agree with you but I think many people forget about simply paying an early withdrawal penalty. Many times it’s a wiser choice once you run the numbers.

Currently I have an Ally CD at 2% but the second it hit’s 3.25% in the coming days I’ll be paying that 60 days of interest. Same for several of my other CD’s.

You could close it now, put it in Ally savings at 2.1%, and pull the trigger whenever the rate gets high enough for you.