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  4. So Where Are The Yields Headed???

So Where Are The Yields Headed???

Fussybob
  |     |   16 posts since 2022

All I see is a downward trend. I bought some 5 year VCDs at 5% a month ago, wish I bought more. I bought 10 year treasury notes at 4.21% a month ago, the 10 year comes up at auction on Dec 8th and looks like it will be around 3.2%. 1% less.

Does it really look like yields have peaked, already built in where the fed is going?

I was hoping (greedy) that 5 year rates would/will be higher than 5% in the coming months but it doesn't look so unless you people know better.............

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Answers
CDmanFL
  |     |   286 posts since 2019
As I had said in a previous post and was scathingly chastised, my hunch is the peak has passed. I’m not happy about this but it is what it is. I bought some of those now legendary 5%ers and wish I had bought much more. Hindsight is always 20/20 so let’s not beat ourselves up over this.
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GH1
  |     |   1,054 posts since 2017
yes i do believe 5 year highs are probably gone, We just have to start getting the 4.5 and 4,75 and lock in those are not the 5.25 everyone was hoping for but they can change to the downside just as fast as upside
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gratitudecd
  |     |   83 posts since 2022
I respectfully disagree with the comments below. I am a firm believer that we will hit 5.5% terminal rate and 60 months will be pressured to hit 5.5 - 5.75 - remember once one institution initiates that others follow suit. Hang in there and I am fairly comfortable with confidence to say that you will have a 60 month CD at 5% this year / early next regardless of CPI. Of course diversifying your risk is smart with CD ladders, etc. but you have not missed the boat, not even close. Good luck.
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Listedguru
  |     |   63 posts since 2022
gratitudecd,

I really hope your right on the CD rates but I fear that even if the terminal rates did hit 5.5% that it might not move the needle much on the long term (60 months) CD's. It would help on the short end with savings accts and shorter term cd's for sure. It just seems like a recession is in the cards most likely just not sure of the severity of it. Does JPowell and have crew have the stones to avoid pivoting at the first sign of trouble in the employment #'s, etc? I have my doubts but that's just me. It seems like the fed governors have gotten more dovish here in their recent speech's ahead of their highly telegraphed downshift to .50bps hike in December.

We have PPI tomorrow followed by CPI and the fed next week which will include the revised dot plot so plenty of fireworks on tap that's for sure. The question is will those fireworks be able to spike up yields and keep them climbing or turn out to be duds? If the coming data and the fed dot plot, etc are construed as dovish then the top is in for yields for sure (IMHO).
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sams1985
  |     |   781 posts since 2022
Consider yourself lucky that you at least bought some at 5%. I wish i had cost laddered in. I'm not really sure what is going on with the treasury yields but the farther they drop the less confidence i have moving forward. I think at this point we'll only get to see 5% + short term CD's.

What is driving the yields down? Pure sentiment- upcoming major recession + ultimately the fed pivoting + inflation ending. If the next CPI report has even a slight, tiny, little hint of inflation slowing down it's all over. At that point i' think i'm going to jump into whatever 4%+ 5 year CD's are left with my remaining funds. Even the Fidelity money market fund i'm in has decreased a bit and is no longer shooting up.
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Listedguru
  |     |   63 posts since 2022
sams1985,

I think your thinking here is correct. I'm pretty worried about the upcoming CPI too - if it comes in at all light then I agree it's ballgame over. I'm sure the Fed will do 50bps for December and may even come out with a hawkish dot plot but I don't think the market is buying into it at this point. I think the fed will fold like a cheap card table at the first hint of weakness in the jobs market, etc.

All that being said, I'm sill debating what I want to do for y 5 year CD's. I will do direct CD's at this point. I was hoping for one more push up of lt cd rates but I fear that probably won't happen. Bread Financial is still 4.75% at 5 years but not sure if that's a risky bet or not (probably not)? Also I'm keeping an eye on Sallie Mae at 4.55% for 5 years. Have you or anyone else had any experience with either of these co's for cd's? Any other fi's you would recommend? I have some CD's with Ally and I've been happy with them but their rates are pretty crappy right now.
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John19
  |     |   395 posts since 2022
Sallie Mae can be a pain to open, they made me email them a copy of my SS# and it took a few days to open the account. Easy after that. Bread was easy to open. One rate I'd like to see is a Navy Federal 4.5% 7 year CD. But who knows where things go from here
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sams1985
  |     |   781 posts since 2022
I dont have any experience with any of those banks. Part of the reason I opened a fidelity brokerage account was the hassle free ease of buying brokered CD’s and me wanting to avoid having to open multiple accounts at random , lesser known online banks and CU’s.

But depending on what happens next week , I may not have a choice. A part of me still wants to stick with the big banks (Amex , discover , capitol one, Barclays) just for their reputation but the 60 month yield is only 4.25 APY.

Maybe just maybe , sending out a little prayer, those yields rise to 4.5 after a next rate hike but likely wishful thinking.
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Listedguru
  |     |   63 posts since 2022
I too was hoping to stick with a Big Bank for cd's but like you mentioned they seem to be stuck at 4.25%. If they would just bump up to 4.50 I think I would make the jump.

I'm going to be opening (2) large cd's so what I could do is lock in Bread at 4.75 (god willing, lol) and hit up one of the big banks at 4.25 = a rate of around 4.5 as the cd's will be both for the same amount. It's interesting with Discover that you can do 7 or even 10 years at the current 4.25% rate but the EWP is (2) years for 5,7,or 10 years. Probably not a deal breaker for me but 7 or 10 years is a long time, lol.

I just don't trust the fed to stick to their plan once the crap hits the fan. Also I coming from a 2ish rate at Ally which was darn good for when I opened it so anything will be a huge improvement for me.
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Listedguru
  |     |   63 posts since 2022
Wow that kind of sucks about Sallie Mae. But on the flipside it's good to hear that Bread was easy to open. With Bread do you know if you can lock in the rate and have so many days to fund it? I would hate to get it all opened and have them drop the rate and not get it locked in. I would assume you are comfortable with Bread from a financial standpoint correct?

Also with Bread do you know if you can w/d your interest monthly into any account you choose?
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Fussybob
  |     |   16 posts since 2022
With Sallie Mae at the time you start the application with them you lock in the rate, which I did last Friday at 4.55% for 5 years, then they send you an email in a day or two for a copy of your Driver's license which you can email back to them as an attachment. Then they send you an email that you were accepted and to setup an account. I think that I'm just going to buy more 5 year CDs with them tonight and then buy some 7/10 year treasuries at whatever yields they are this month as a hedge down the road that the yields will go back to 2% five years plus from now.
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John19
  |     |   395 posts since 2022
I believe you can only buy one CD during the initial application though and it can take a few days to set up your account before you can some more, I think. It'll be interesting to see what happens with Sallie Mae rates and Capital One too. Navy and Discover should be a good fall back plan.
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Listedguru
  |     |   63 posts since 2022
Fussybob,

John19 mentioned that Sallie Mae made them email a copy of this ss# which seems very strange. Were you required to do that? I know you mentioned you had to email them a copy of your driver's license.

Also do you know if they do any sort of credit pull or ChexSystems? If so I think I would have to unfreeze them.

Also do you know if you can w/d the interest generated by the cd on a monthly basis to an outside acct?
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Fussybob
  |     |   16 posts since 2022
I started an SMB application last Friday. During the online application you furnish your SSN#, linked bank routing/account numbers and the CD investment amount/time frame, and lock in your rate. You log on to your linked bank account at that time also and they confirm you. On Monday they asked that a copy of my driver license be emailed to them. On Wednesday the confirmed everything and asked you to setup your account.
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John19
  |     |   395 posts since 2022
I would only buy like $100k or so of Bread CDs. I feel there as good as any credit union of their size out there and I like their crummy store credit cards lol, but other banks are better for larger sums and longer terms.
Funding their CDs is kind of weird, you can't fund it direct from your Bread Savings acct, but you can fund it through another acct (or your Bread Savings) through Plaid I think. So probably best to fund it immediately. The Disclosure says any interest can be withdrawn whenever, into other accts also i'm pretty sure. It's ok for me for some smaller CDs but I wouldn't want all my money there.
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Listedguru
  |     |   63 posts since 2022
Well that has me thinking twice about Bread now, lol. I was planning on doing more than 100K. They seem to have a strong rating here on deposit accounts. I would hope they would never fail (or any institution for that matter) but I understand it does happen.

Also betaguy mentioned that they believed bread requires the use of plaid to set up the account. You mentioned funding an account at Bread is weird because of the plaid deal. I'm not really familiar with plaid but have seen it mentioned a few times on these boards.

Why is this so complicated, lol.
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betaguy
  |     |   180 posts since 2022
I believe bread requires the use of 'plaid' to set up account. big NO for me.
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chill08
  |     |   96 posts since 2022
I have a 60 month 4.97% in pending stage with Pelican State CU. Very positive communications. I am grateful my application made it in before rate changed.
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sams1985
  |     |   781 posts since 2022
Question for you guys who opened accounts at bread and sallie mae- do they allow CD's to be opened jointly so you can up the FDIC coverage to $500k? I know discover / Cap one / Amex allow it.
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Fussybob
  |     |   16 posts since 2022
FYI - I just set up a Discovery Bank account tonight and it only took about 5 minutes. I bought a few CDs at 4.25% for 5 and 7 years. Right now I'm averaging about 4.5% for all my 5 years+ CDs and Treasury Notes that I purchased in the last few months and I'm just going to be content with the end result.

I have still have some cash available and will look at buying some 10 year Treasury Notes during Dec after the Feds meet.
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Listedguru
  |     |   63 posts since 2022
I already have an existing savings acct at Discover so opening a CD there should be really easy (I would hope). Do you happen to know if you can pull interest out of the cd monthly at Discover?

I kind of like the idea of going out 7 years at Discover I just wish they rate were a smidge higher. Also I believe the EWP is 2 years but not really an issue for me. I'm just so torn whether do jump onboard now or wait and hope that things pop a little higher and don't go lower, lol.

It just seems that all the inflation data is treated as rosy by the market now and i fear the fed hikes are nearing an end. I keep reading articles about the terminal rate having to go to 6%,etc but I just don't see that happening but I've been wrong before,lol.
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sams1985
  |     |   781 posts since 2022
A lot of forecasters both on here and other sites claim it will have to go higher. But look how quickly they pivoted to .50 instead of .75 despite inflation at record high levels. Let's see, another week is not gonna change much.
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LongTimeDAFan
  |     |   69 posts since 2022
Forecasts are for entertainment purposes only. If the forecast is correct, they will tout their forecast. If the forecast is incorrect, they will just change their forecast with no consequence to them. Use your best judgement in making decisions for yourself, and always remember that other people want your money. Our personal motto of "Don't get greedy" has always panned out for us in the rear-view mirror. We have learned that when trying to time the market, you will only see when the peak has happened after it has happened. No one knows what will happen in the future for sure; all we can do is make educated guesses.
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CharleyRay
  |     |   12 posts since 2022
I have less then 3 months left before my 3% APY/ 5 year CD matures. If this thing falls apart by then and I have to settle for 3% again, damn. I'll be 71 y/o in April, damn.
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MoneyMoves
  |     |   149 posts since 2019
Charley, Maybe worst case higher than 3% BUT not for 5 years. Same here 2 maturing in 2023; eom Jan and eom May.
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sams1985
  |     |   781 posts since 2022
Maybe not long term but you may have chance at 5% 2 year
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LongTimeDAFan
  |     |   69 posts since 2022
I've been watching rates like a hawk for a long time, and while I've been hoping for higher rates long-term, I have lost confidence it will happen. I personally think the long-term rate treasuries have peaked in October. Before the CPI numbers came out in Nov, I was still holding on to hope, but when I saw the long-term treasuries taking a dive, we bought a bunch of 20 year treasuries, ending up with a rate of 4.0%. We decided at that time not to get greedy, and since that decision all I have seen is the treasury yields dropping and dropping for everything 2 years and longer. We've also seen some of the 5 year CDs at CUs dropping their rates and not being replaced. While I do expect short-term rates to rise for the short-term, it does not seem likely that long-term rates will rise because rates are expected to drop in 1-2 years.
Navy still has their 4.2% and 4.25% for 7 years. We were able to take our IRAs which were at 3.44% and change those CDs into the 7 year CDs at 4.2% with no EWP, which was fantastic. That seems like the best option out there long-term through CUs. Just my personal opinion.
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MoneyMoves
  |     |   149 posts since 2019
LongTime, Please explain how your success with Navy was achieved; no EWP to change from 3.44% to 4.2%. Thanks!
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Listedguru
  |     |   63 posts since 2022
LongTimeDAFan,

Unfortunately I agree with your take that long term rates and long term cd's have probably peaked. This is one time where I would really like to be wrong though.
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sams1985
  |     |   781 posts since 2022
I could be grasping at straws but the cpi could shake up the narrative. Could also put the mail in the coffin. The ship may be sinking but still plenty of life boats….
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Listedguru
  |     |   63 posts since 2022
We get the PPI tomorrow morning which shows inflation "in the pipe" as they say. I did ready where if the PPI were to come in soft (which is very possible) that the strength in the employment #'s may pretty much override weakening PPI#'s but who the heck really knows anymore. By this time next week we should at least have a lot more info on the inflation front and the fed outlook,etc.
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lou
  |     |   1,004 posts since 2010
The last thing you are is a guru, at least when it comes to investment punditry.
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betaguy
  |     |   180 posts since 2022
shaking out the weak.
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