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  4. 10 Year T Bonds Approaching Peak Of 4.25% Might Trigger 5 Year Cds To Climb Again. Thoughts?

10 Year T Bonds Approaching Peak Of 4.25% Might Trigger 5 Year Cds To Climb Again. Thoughts?

CDMD
  |     |   141 posts since 2022

I am sure you may have noticed the increases in the long end of the Treasury yield curve which may soon eclipse the peaks reached in the fall of 2022. This could raise long term CDs again. Thoughts?

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Answers
gratitudecd
  |     |   83 posts since 2022
For a 5 year to be compelling for me it would need to hit 6% APY at a minimum. Do I think we will see that? Probably not. However I do anticipate we may see 5.5 or potentially 5.75 when all is said and done in this hike cycle.
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CDMD
  |     |   141 posts since 2022
5.25 - 5.75 would be just fine for me!  But would still want an A rated institution or better.  A c- FI won’t get my attention
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fred_b
  |     |   172 posts since 2022
I agree that the 5 year CD APY is going higher. I already got 5.37% APY from Advancial today and recently I got a callable 5 year TD Bank bond paying 6.25%.

As we reach the Fed terminal rate the yield curve should start to uninvert and 'higher for longer' will start to sink in as reality.
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CDMD
  |     |   141 posts since 2022
Advancial not available in my neck of the woods. Northeast
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w00d00w
  |     |   360 posts since 2012
5 year TD Bank bond paying 6.25%

Important to emphasize that this is a bond, not a savings certificate. TD Bank is Canada-based and at least some of their bonds are "bail in" which, according to Investopedia:

A bail-in provides relief to a financial institution on the brink of failure by requiring the cancellation of debts owed to creditors and depositors.
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Kaight
  |     |   1,192 posts since 2011
It is intriguing to contemplate the following:

First, consider inverted yield curves are contrary to normalcy. So what if today's yield curve reverted to normality, or even if it just went flat, while simultaneously short yields held steady at present levels without retreat?
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CDMD
  |     |   141 posts since 2022
Normal 2 - 10 curve could be about 80 - 90 bp. So with 2 year yield currently at 4.9% then 10 year would yield appx 5.7% - 5.8%. 5 year cd should be at least 25 bp higher or thus close to 6%
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CDMD
  |     |   141 posts since 2022
A/O today AM. 10 yr 4.3% and climbing. This has to put upward pressure on longer term CD offerings.
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