The Recent Descent Of Longer-Term Brokered CD Rates

RichardW
  |     |   436 posts since 2019

After this week’s FOMC meeting, as some analysts predicted, longer-term Treasury rates declined and longer-term brokered CD rates followed suit.

As of 12/14/2023, the yield of the 5-year Treasury Note was 3.90% and the yield of the 3-year Treasury Note was 4.09% (see: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treas... )

As of 7:15 pm EST 12/14/2023, these were the highest rates (APR) available at Fidelity for new issue, non-callable brokered CDs: 5-year @ 3.95%, 4-year @ 4.10%, and 3-year @ 4.20%




txFish1
  |     |   298 posts since 2023
@RichardW. One other thing I noticed on Fidelity was that on Monday mid-morning there was 196 CD's listed in their inventory and today there was 52 total new issue CD's and the bulk of them were 1 year or less maturities.
CDmanFL
  |     |   250 posts since 2019
Well friends it’s time for us to hold hands and have a group barf. The rug is not being pulled out from under us slowly or gently, but rather it was yanked, soiled with diarrhea, and burned. It’s over folks. The party is over. Let’s not sugarcoat it. The paradigm has shifted mightily and we need to get ready for another long, maybe very long, round of sh**** rates. Have a beautiful evening!
sams1985
  |     |   607 posts since 2022
I refuse to concede this rate cycle as being over until i see that first Fed rate cut with my own two eyes.
CDmanFL
  |     |   250 posts since 2019
Brother Sams,
I like that you are clinging to hope. I’ve lost all hope sadly. I would love to eat humble pie and say that I was dead wrong but the world is against us savers. There’s no logical reason in my mind for reversing course so quickly. My HOA fee for next year is going up about 25%. And inflation is tamed? What the heck is going on around here? Maybe I should just buy some fixed income annuities and be done with CDs. Tired of the bloodbath.
dave9354
  |     |   62 posts since 2010
Just wait until your homeowners insurance bill comes in! Florida is going to get socked!
chill08
  |     |   70 posts since 2022
I received mine for renewal in Texas, I thought I was prepared, there was no way I was prepared for the increase. No claims. Ever. Grim.
GH1
  |     |   967 posts since 2017
Florida has huge problems. Yea homeowners averaging 6000 homeowners policy
Robb
  |     |   229 posts since 2018
My cousins bill just came in and it went up from 3k to 8k. Just insane!!
sams1985
  |     |   607 posts since 2022
1700 to 3450 in NC.
betaguy
  |     |   154 posts since 2022
this is what they call 'shaking out the weak'.
Bob42
  |     |   17 posts since 2019
We got it wrong. It was hire for longer, not higher for longer. Who knew?!!
CDmanFL
  |     |   250 posts since 2019
I don’t think they have a clue what they are doing. They are detached from the real world. Yes, my stock portfolio has soared to new heights so yes I’m getting richer and richer each day but at what price? People are cheering the expected rate cuts but they will still be paying for all this inflation through their nose. Higher for longer was the right path. They blew it. But hey, at least I have some beautiful “paper” gains in the stock market and that’s all they are worth until the next crash and then the Fed will really have the reason they are looking for to go back to their new comfort zone of ZERO.
w00d00w
  |     |   228 posts since 2012
the 5 basis point spread for 3 year brokered CD over treasury and 11 basis point spread for 5 year terms lack appeal whether buying in taxable or tax deferred account. good for the banks if they can borrow from savers at a razor thin margin above the government rate without providing the TNote benefits of very high secondary market liquidity and a potential state/local income tax break. on the other hand, the brokered CD would have more short-term appeal should the Treasury rate continue to plummet between the time the CD offering opens and closes.
txFish1
  |     |   298 posts since 2023
The 5 year brokered non-callable Cd on Fidelity's website as of this afternoon is all the way down to 3.85%
sams1985
  |     |   607 posts since 2022
Great time to unload some brokered CD’s if you already have an account open with with a bank or CU that still has great rates.
txFish1
  |     |   298 posts since 2023
sams. I do have some 5% brokered 5 year CD's that are trading at a premium that I may sell on Monday and I have an account at both Advancial (5.4% 5 year) and USSFCU (5.34% for 36-47 months) that I can open CD's at quickly.
betaguy
  |     |   154 posts since 2022
Hi tx. How do you get a cd for 36-47 months? Thanks
txFish1
  |     |   298 posts since 2023
betaguy USSFCU let's you choose how many months you want the CD for. The 3 year rate is currently 5.34% APY and it is good for anywhere from 36 months up to and including 47 months. The 4 year is 48 months up to 59 months etc.
betaguy
  |     |   154 posts since 2022
Thanks tx.
gratitudecd
  |     |   34 posts since 2022
I sent you a PM txfish1. You are right about the rate @ 5.34% but it’s only fixed at 36 months. I checked with the CSR today they said they do not do ranges from 36/47 b/c I wanted to do a 47 month
txFish1
  |     |   298 posts since 2023
gratitudecd I have been a member for over 10 years at USSFCU and have had many CD's with them of which 3 or 4 were specific maturity dates including the one I took out earlier this year for 35 months and got the 24 month (2year) rate as it was the highest at the time. Maybe they have changed their policy recently as this has been an option with them for years
txFish1
  |     |   298 posts since 2023
gratitudecd I just got your PM this morning and I went ahead and called a contact I know at USSFCU and she did confirm that you can choose how many months you want the CD for. So if you want a 47 month CD just ask for it and you will get the 36 month jumbo rate at 5.34%. My guess is that the CSR you spoke to is either fairly new or has never had that particular question asked of him/her but rest assured that they do still offer that program. If you try again and you get a no response just ask the CSR to verify with a supervisor.
betaguy
  |     |   154 posts since 2022
I was denied the 47mo. at 36mo rate today. She said they dont do that.
this was all in a chat session. frustrating.
txFish1
  |     |   298 posts since 2023
betaguy. I would call them early in the morning (800-374-2758) when they first open and ask for a supervisor as she told me yesterday they still do this.
sams1985
  |     |   607 posts since 2022
You may make some decent $ on flipping those 5% CD's. My synchrony and discover 5% were trading near $102 today. Just be aware that Fidelity takes 2 days for the funds to "settle" before you have access to them. I'm trying to unload a Capital one 4.3% which i stupidly picked up last year right at the start of the cycle and move that money to Advancial. I put a bid request in and was offered 99.50. Losing $500 and moving to Advancial would still be beneficial in the long run but waiting till Monday to see if i can get Par.
John19
  |     |   307 posts since 2022
Sold a Discover 4.6% at Schwab yesterday at a $10 loss. I think you can transfer the money the day it sells there. I haven't had any luck opening Advancial so far, but I can buy Wescom 4.7% at will lol. I probably will sell another 100k in Brokered CDs if I can switch them to BMO/Advancial maybe. Definitely YMMV when opening accounts. Definitely get rid of that 4.3% and get something better!
anonlol
  |     |   160 posts since 2016
History tends to repeat itself bring it
The Fed’s big error would be to trim rates too soon, failing to vanquish inflation. The central bank doesn’t want to repeat its 1967 mistake, when it cut rates to bolster growth only to see prices take off. Officials are wary of reducing rates prematurely for fear that new shocks—a run-up in oil prices, for example—ignite a new inflationary surge, as occurred throughout the 1970s.
Stagflation in the 1970s combined high inflation with uneven economic growth. High budget deficits, lower interest rates, energy prices and the collapse of managed currency rates contributed to stagflation. Under Federal Reserve Board Chair, Paul Volcker, the prime lending rate was above 21% to reduce inflation.
Inflation began ratcheting upward in the mid-1960s and reached more than 14 percent in 1980. It eventually declined to average only 3.5 percent in the latter half of the 1980s.

Some inflation may be coming down prices are quite elevated from the run up in many sectors and still going up well above 2 %
John19
  |     |   307 posts since 2022
My 25k 4.8% 5 year Morgan Stanley 3/16/28 has bid request of 101.425, and my 25k 5% Discover 3/21/28 has bid request of 102.175 as of right now.
sams1985
  |     |   607 posts since 2022
I got out of my capital one 60 month 4.3% today but it cost me $200. Still worth it. I
sams1985
  |     |   607 posts since 2022
Maxed out Advancial and still have a good chunk left over to put into another long term CD.

Take the 60 month BMO Alto at 4.9 or the USSFCU 36-47 month at 5.34%?

or wait for treasuries to spike back after inflation creeps back up and labor market stays hot???

Decisions, decisions.
John19
  |     |   307 posts since 2022
I'm very tempted to sell my CDs and wait longer! BMO scared me off with their disclosures, is USSFCU easy to join? I'll probably try that next. I can only trade for Barclays/Wescom as of now lol. I'll probably keep the powder dry and wait, my ego won't let me buy more ETFs after missing the last market correction. Kind of risky to go after a deal, have it take to long and miss out on other rates. Glad I bought brokered CDs so I can switch them!
txFish1
  |     |   298 posts since 2023
USSFCU was very easy for me to join but it has been almost 10 years ago. Applied and opened on the same day. Stopped by a shared CO-OP shared branch and made a deposit and the money was in my account instantly. I sold some Wells Fargo 5.05% 5 year CD's yesterday on Fidelity and got 120.15 for them and will take the proceeds from that and open another Advancial 5.40%.
John19
  |     |   307 posts since 2022
I saw the hard pull for USSFU. I might not have much of a choice at this point. After CIT closed my account I worry more about choosing the right banks.
txFish1
  |     |   298 posts since 2023
John19 I have always had good luck with USSFCU in fact I cant think of an issue I have ever had with them. They usually have above average CD rates but not very good liquid savings rates but I dont use them for that anyway.
RichardW
  |     |   436 posts since 2019
txFish1, The bid prices I currently see listed today at Fidelity for the Wells Fargo, 5.05%, 5-year, brokered CD range from 102.787 to 102.926. Are you sure you got a price of 120.15 yesterday? Perhaps you meant 102.15.
txFish1
  |     |   298 posts since 2023
RichardW I wish I sold them for 120.15!!! It was a typo as I was multi tasking and not paying attn to what I typed. I got 102.75 for a fairly large lot yesterday. Looks like I could have received a bit more if I sold them today instead but still not bad as I just bought those in November. Made a little money and will make a little more interest at Advancial as I plan on opening another CD there tomorrow as the Wells Fargo will be settled tomorrow. Thanks for pointing that out.


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