CD Rates Summary April 10, 2018

Friday’s weak jobs report wasn’t good news for those hoping the Fed will hike rates at least three more times in 2018. The number of jobs added in March was 103,000 which was below the consensus expectations of 175,000 jobs. Even though the report was disappointing, it shouldn’t deter the Fed from a June rate hike. According to this USA Today article, the “weather was the main reason for March's poor performance. And payroll gains for the first three months of the year still averaged a very healthy 202,000, up from 182,000 last year.”

It’s safe to say that we’re still on track for two more Fed rate hikes in 2018. An occasional weak economic report probably won’t change things much. However, if we start to see a trend of disappointing reports, that could have an impact, especially in the Fed’s decision between a total of three or four rate hikes in 2018.

On Wednesday morning, the Consumer Price Index for March will be released. If inflation is weaker than expected, that will be another factor reducing the odds of four Fed rate hikes in 2018.

Also on Wednesday, the Fed will be releasing the minutes of the March FOMC meeting. That may provide more insights about what the FOMC members are thinking regarding future rate hikes.

Treasury yields changed little from last week. The largest change was the 1-month T-bill yield; the yield fell 7 bps from last week. The 2-year Note had the largest yield increase, rising 4 bps from last week.

The odds of a Fed rate hike in June and September were up from last week according to the Fed funds futures. They now show the chance of a June Fed rate hike at 90.2%, up from 80.7% last week. The odds that we’ll see three more Fed rate hikes this year declined slightly from last week falling from 30.0% to 28.9%.

The following numbers are based on Daily Treasury Yield Curve Rates and the CME Group FedWatch.

Treasury Yields:

• 1-month: 1.63% down from 1.70% last week (0.77% a year ago)
• 6-month: 1.93% up from 1.92% last week (0.97% a year ago)
• 1-year: 2.09% same as last week (1.07% a year ago)
• 2--year: 2.32% up from 2.28% last week (1.29% a year ago)
• 5--year: 2.62% up from 2.60% last week (1.91% a year ago)
• 10-year: 2.80% up from 2.79% last week (2.37% a year ago)
• 30-year: 3.02% same as last week (2.99% a year ago)

Fed funds futures' probabilities of future rate hikes by:

• Jun 2018 - up by at least 25 bps: 90.2% up from 80.7% last week
• Sep 2018 - up by at least 50 bps: 58.0% up from 54.0% last week
• Dec 2018 - up by at least 75 bps: 28.9% down from 30.0% last week

Certificate of Deposit Rates

The above graph shows the rate trends of the average CD rates. These average rates are based on all the rate data that we have collected over the years. This is an interactive graph. You can choose the term of the CDs (from 3 months to 5 years) and the look-back period (from 3 months to 5 years). As you can see in the graph, average CD rates for all terms have increased in the last year, but the largest gains have been on the short-term CDs.

Best Nationally-Available CD Rates

Brokered CD rates have reached a couple of milestones since my last summary. We now have a 2% 9-month CD and a 3% 60-month CD. These are new issue brokered CD rates as of noon today at both Fidelity and Vanguard.

For most terms, you can still find higher rates from direct CDs offered by internet banks or credit unions. There are now three exceptions. Brokered CD rates are on top for 2-year (2.60%), 3-year (2.80%) and for terms over five years (3.20% for 10 years and 3.10% for 7 years).

In a changing rate environment, brokered CD rates are often the first to change. So it’s likely we’ll see more rate hikes on direct CDs at internet banks and credit unions.

We have seen many CD rate hikes from internet banks and credit unions in the last two weeks, but most of these rate hikes haven’t resulted in new rate leaders. One exception is a new 18-month CD special from USALLIANCE Financial Credit Union (2.53% APY).

Several of the large internet banks have moved closer to the rate leaders. None have reached the rate leaders, but they’re are coming close. Examples include PurePoint Financial’s 1-year CD (2.20% APY) and Synchrony Bank’s 1-year CD (2.15% APY)

Except for the brokered CDs, we’re not seeing additional nationwide 5-year CDs with yields of 3%. American Bank continues to be the only bank to offer a nationally-available 3% APY. The other 3% direct CDs are all from easy-to-join credit unions such as Mountain America, Service and Quorum Federal.

We are starting to see more local 3% CDs. A few new noteworthy ones include 5-year CD (up to 3.20% APY) at Alaska USA Federal Credit Union (available in AK, WA and parts of CA and AZ), 4-year CD (3% APY) at Washington Trust Company (available in RI, CT and MA), 3-year Step-Up CD (blended 3.04% APY) at Meridith Village Savings Bank (available in parts of NH) and 3-year CD (3% APY) at Greater Hudson Bank (available in parts of NY).

Long-Term CDs with Mild Early Withdrawal Penalties (EWP)

Barclays increased its 5-year CD rate to 2.75% APY. Since this CD has an early withdrawal penalty (EWP) of only 180 days of interest, this is now one of the top 5-year bank CDs when closed early. Compared to Ally Bank’s 5-year CD (2.50% APY with an EWP of 150 days of interest), Barclays has the highest effective rate if the CD is closed after 17 months. Ally’s rate is higher if closed before 17 months. Utah First Credit Union’s 5-year CD (3% APY with an EWP of 180 days of interest) continues to offer the best rate for a 5-year CD closed early.

Below is my standard explanation of the strategy of using long-term CDs with mild early withdrawal penalties and how I include these effective yields in the tables below.

An alternative to short-term CDs is long-term CDs that have mild early withdrawal penalties. I include the effective yields of a few long-term CDs when closed early in the tables below. All of these have competitive long-term CD rates and an early withdrawal penalty of 6 months of interest or less. The combination of a high long-term CD rate combined with a mild early withdrawal penalty makes these CDs pretty good deals even when closed early. If you want to compare the effective yields of other CDs after the early withdrawal penalties, please refer to our CD Early Withdrawal Penalty calculator.

The risks of planning for early withdrawals of long-term CDs were highlighted by the deposit agreement change at Ally. The risks have also been seen at credit unions which have raised the early withdrawal penalties on existing CDs. I have more details in this blog post.

Savings & Checking Account Rates

In the past, I’ve covered savings and checking account rate changes in another weekly summary post. Each week I would publish one post with a recap of savings and checking account rate changes and another post with a recap of CD rate changes. I’m now alternating these posts. Here's the link to last week's savings/checking account summary. You can always get the latest rates for savings/checking accounts and CDs by using our rate tables, available via the navigational menu on top.

Yields Accurate as of April 10, 2018

Under 1-Year CD Rates

Noteworthy Local Deals - Under 1-Year CDs

1-Year CD Rates

Noteworthy Local Deals - 1-Year CDs

18-month CD Rates

Noteworthy Local Deals - 18-Month CDs

2-Year CD Rates

Noteworthy Local Deals - 2-Year CDs

3-Year CD Rates

Noteworthy Local Deals - 3-Year CDs

4-Year CD Rates

Noteworthy Local Deals - 4-Year CDs

5-Year CD Rates

Noteworthy Local Deals - 5-Year CDs

Over 5-Year CD Rates

Noteworthy Local Deals - Over 5-year CDs

* BoC (Bank of China), CBNA (Citizens Bank NA), CBPA (Citizens Bank of Pennsylvania), CBRI (Citizens Bank NA Providence RI), CPB (Compass Bank), DIS (Discover Bank), GSB (GS Bank), MRB (Merchants Bank), MRBI (Merchants Bank of Indiana), MSB (Morgan Stanley Bank), MSPB (Morgan Stanley Private Bank), SB (Safra Bank), SMB (SallieMae Bank), SYN (Synchrony Bank), WFB (Wells Fargo Bank)

CDs Removed Due To Low Rates Or Expired Specials

CDs Removed, No Longer Available - Nationwide

CDs Removed, No Longer Available - Local

CDs Removed, Rate Too Low - National

CDs Removed, Rate Too Low - Local

Post Publication Edits

4/11/2018: Crestmark Bank CD rates lowered.

4/11/2018: My eBank CD rates raised.

4/12/2018: Capital One 360 CD rates raised.

4/13/2018: Colorado Federal Savings Bank 12-month CD rate raised.