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CD Interest Rates And The Election

Kaight
  |     |   1,192 posts since 2011

The American voting public, writ large, has the attention span of a gnat. Thus by November is appears likely a great many of Biden's obvious failings as POTUS will have become forgotten, or at least will no longer be front of mind for many voters.

Trump has his own many problems and shortcomings, to which it now appears we might soon be able to add Taylor Swift.

Bottom line I'm having a really tough time being able to predict a winner in November's POTUS election. This is a problem because, in my view, the next POTUS will have an impact on CD interest rates.

Should Biden prevail, I'm thinking he will try to go right back to the sort of deficit spending he clearly favors while of course the border remains wide open. And as a lame duck there will few if any restraints on his innate proclivities. In my gut I associate a Biden victory with higher CD APYs. I do not want to be caught holding longer term CDs should Biden be re-elected.

If Trump is the eventual POTUS election winner, I have an entirely different gut feel. I think CD interest rates are less likely to balloon with Trump in the White House. Thus with a Trump victory, savers who have locked in longer term 5+% APY CDs now will likely be doing rather well.

All of the above might be correct, or I could be off the mark and full of prunes. But my problem personally is inability to predict which man will be the eventual election winner. So I'm left "splitting the baby" and buying CDs having maturities of intermediate length. It's a conundrum.

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CDmanFL
  |     |   286 posts since 2019
Let's not forget that Trump demanded the "boneheads" at the Fed to plunge interest rates into negative territory. What kind of fool, Democrat or Republican, would say such a thing? It's ridiculous, alarming, and mind-blowingly stupid. I'm not a Biden fan, but if Trump is elected, ZIRP (and possibly worse) here we come again. For that reason and that reason alone, I'm supporting Biden. I'm fearful that Trump would destroy the yield curve as well as the plans and livelihood of us savers. With all due respect, I would love for the Trump supporters here to explain their feelings on his former request to take rates negative. Maybe I'm missing something, but those countries who experimented with negative rates have miserably failed that experiment.
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Steve58
  |     |   461 posts since 2018
Any one that votes democrat is a dam(n) fool. Voting democrat for the possibility of higher interest rates is a vote for the destruction of our economy. Deficit spending is all in vogue for democrats. Interest on the debt is higher than Defense spending. Wasting money is their thing (see any of their bills passed the last 3 years). Selfish much? You might enjoy higher interest rates, but at what cost? Higher inflation? Meaning you will be losing in the long run. And it will bring an end to your way of life.

Not saying the Republicans are any better, but at least they might fix the border chaos brought on by the liberals in charge now. They might actually make the world safer again. They might get us out of wasting money on the Green revolution sought by the globalist/fascists who hate American freedoms and our way of life and seek the destruction of our economy. They might make our streets safer from the insane policies of liberal democrats.

If you can't vote for Trump, I can understand. If you can vote for Biden, I can't understand. My recommendation is to vote 3rd party for president and suck it up and vote republican on the rest of the ticket. Else we have you to blame when it all falls apart. And your money will not be safe, I don't care what kind of guarantees of government safety you think your CD investment has.

Last warning to you fools...Steve
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sams1985
  |     |   781 posts since 2022
Steve,
I can't get myself to vote for Trump or Biden at this point. Unfortunately, both parties don't represent the American people very well, only obeying their corporate oligarch overlords while pandering to us(Trump being the biggest charlatan of them all) None of them are serious about deficits(or any of the stuff you mentioned) and it has show in the last 24 years.
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betaguy
  |     |   183 posts since 2022
as in most elections, it usually comes down to voting for someone as a way to vote against the other candidate.
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Steve58
  |     |   461 posts since 2018
Sams,
As in my post you replied to, you can see I am in the same boat you are. I do not like either candidate or party. Neither party is fiscally conservative, including Trump. I vote on fiscal issues. Deciding where to put your X on the ballot comes down to this on fiscal issues...which party is more likely to:

Raise taxes across the board (democrats)
Increase inheritance taxes (democrats)
Push for reparations (democrats)
Push for cancelling all student loans without fixing the high cost of education (democrats)
Push for Medicare for all including illegals(democrats)
Push for free child care (democrats)
Push for guaranteed income. (democrats)
Push for increase in welfare, food stamp availability. (democrats)
Push for more illegals to surge the border and to be subsidized by tax payers (say 10 million each term) (democrats)
Push to waste more money on green energy subsidies (democrats)
Push to decrease drilling for natural gas and oil (democrats)
Fix social security and medicare (neither party)
Increase regulations on everything. (democrats)

All these are destructive to a healthy economy and our country. And lets not even get started on social issues.

Steve.
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Sanger
  |     |   321 posts since 2022
Hi for me it is country first we are losing our country as we know it, we did not have these problems when Trump was in office the wars going on and the open borders. And inflation it is all out of control I am still working at the age of 68 years I have a business for 45 years, so I am not planning on retiring any time soon because I really like what I do so if Trump gets back in office, I think we will be much better off if Biden gets another term are taxes are going up big time so I rather have lower interest rates if need be to save our country I just got back from a Trump rally in Las Vegas Nevada the energy there was amazing for me it is about saving our country we will see very soon the election cannot come soon enough .
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Kaight
  |     |   1,192 posts since 2011
In light of the OP I do not find "I'm for Biden" or "I'm for Trump" posts very helpful or constructive. Obviously the country is badly split and feelings run hot on both sides. I understand that.

This thread is about who will win; it's not about who you hope will win or why. This is because, as I opined in the OP, I honestly believe CD interest rates could be impacted depending on which of these guys bests the other.

We all have our fervently held hopes for the election outcome. But who actually is gonna be the victor in November? That's the question here.
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Steve58
  |     |   461 posts since 2018
Sorry to have gone off topic OP,

"But who actually is gonna be the victor in November? That's the question here."

Answer: The American people if republicans win the house, senate, and presidency.

And for now a Trump win seems more likely until the deep state goes after Trump again.

Why Trump will win (at this point): Look at today's polling results in swing states at Realclear politics just posted.

Arizona: +3
Gerogia: +8
Michigan: +5
Nevada: +8
North Carolina: +10
Pennsylvania: +3
Wisconsin: +5

These are astronomical numbers at this point, and the numbers are even better if you poll with third party candidates.  If you are a gambling man, go with the betting odds.  Right now the betting odds have Trump at 43.8% of winning the presidency, Biden at 32.3%, Michelle at 8.6%, and Haley at 4.2%.

Why Trump won't win (closer to the election): The deep state will fabricate another lie near election time, just like last time (my wild donkey guess, tied to Epstein). Also the fed has been in the pocket of democrats and the deep state, so they will lower interest rates at a quicker pace closer to the election, causing a boom in the stock market almost assuring Biden re-election.

Steve
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Kaight
  |     |   1,192 posts since 2011
Thanks, Steve, good and helpful analysis.
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milty
  |     |   1,693 posts since 2018
Biden +6 (Quinnipiac). Regardless how it goes, claims of some deep state collusion favoring only the democrats is not only ridiculous but totally unfounded, which of course is why Trump supporters believe it.
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Steve58
  |     |   461 posts since 2018
Outlier national poll. In that same poll with 3rd party candidates, it only has Biden by +2. So there is that.

If i had my head in my sand, I wouldn't believe in the deep state either. As a well read independent voter, it is easy to understand just how bad the deep state actors are embedded in the Government. But that deep state discussion would be better suited for another forum.
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JeffinEasternFL
  |     |   744 posts since 2020
Like the Fed leaned today, it IS an election year so I expect rates to decrease LESS than the pundits mentioned and probably will end the year .50 ~ bps less than originally thought, but, ...who cares, what will be, will be. just always be prepared for the unexpected.
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Kaight
  |     |   1,192 posts since 2011
Understood. But again, it's not pre-election interest rates that are the focus here. It is instead where interest rates will be headed after January 20, 2025.

My goodness, people buying into five year CDs today are making a commitment all the way out to 2029!!  Personally I lack the prescience needed to make a bet that big.
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JeffinEasternFL
  |     |   744 posts since 2020
My thought: Nobody can predict (but, can guess at least) interest rates THAT far out, too many variables! My feelings: if you can lock in money at 5% + for over 2 years, DO IT! (Why not?). I laddered a Jumbo CD maturing starting  this year and Every year through 2028 at 5%+ APY!

I did that starting late 2022/early 2023, the interest income has been "Tumptastic" one might say! (close to $60K annually). Been a long time since that's been on my tax return and not bad for the "fixed income" portion of my portfolio!
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betaguy
  |     |   183 posts since 2022
My feelings:
If you truly believe the "deep state" stuff, How can you expect rates to ever be meaningfully above 5%. They will be controlled and suppressed just as they are now. I always try to buy CDs as far out as possible (5% and over).
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JeffinEasternFL
  |     |   744 posts since 2020
It's/they are at about the highest rates of the century, what's to bet against?
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DannyKyle
  |     |   68 posts since 2022
If Biden (Fake It Until Make It) wins again = Invest in BRICS
If Trump (Slutty Mouth) wins again = Invest in US$
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Kaight
  |     |   1,192 posts since 2011
Quinnipiac is a well established polling organization; been around for a long while. Drudge, who favors Biden, is trumpeting their latest head-to-head poll this morning. In something of a turnaround, it has Biden up by six:

https://poll.qu.edu/poll-release?releaseid=3889

Lady voters are hating on Trump something fierce and capsizing his ship. As for me:

With money to place right now in new CDs, and with news like this, I'm definitely NOT looking to go out five years. It's a no brainer for me.
In fact, I'll go a step further:

If the Democrats somehow gain control of not just the presidency, but also both houses of Congress, it's gonna be Katie bar the doors!!  Interest rates could go very high, and I do not want to be locked into a CD requiring payment of a penalty to break.  That could happen either this year or in 2026.  When you are locked in until 2029 it doesn't make a lot of difference!!
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Steve58
  |     |   461 posts since 2018
Nice, if you want to risk all your CD picks on one outlier national poll. National polls mean far less than battleground state polls, if you can believe any poll that is.

What is risky is putting all your eggs in one basket (decision). A ladder approach is a better solution, so locking in some long term CDs above 5% is a no brainer IMO.

It is like having the door plug fly off of the 737 max plane and owning Boeing stock. All your eggs in that basket was disastrous for your finances. The same goes with the economy. If the economy is hit with anything disastrous, the Fed WILL lower interest rates quickly (dare I say ZIRP) to rescue the economy. That is the new normal. All in (long or short term CDS ) one way or the other is not a strategy, it is gambling, and a gamble I am not willing to make.

Good luck with that one...Steve
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racecar
  |     |   633 posts since 2014
I may be in the minority, but I think most people vastly overestimate how much any President can affect the economy. A president's actions might affect it somewhat around the edges, but to me, History, Cylcles, and World Events will absolutely eclipse the impact that a particular president might have with the economy directly.

When Trump was in office (pre-COVID) a friend constantly crowed to me how great the stock market was doing because of Trump. I called it BS then -- just as I call it BS now as a different friend brags that stocks have reached even greater heights because of Biden. Economies have cycles.

What shakes an economy? World events. Under Trump, a worldwide pandemic. Under Biden, multiple wars, including an invasion of a soverign country in Europe.

When gas prices go up under President X, the other party's members shout and blame.
Then when gas prices go up under President Y, that other party's members shout and blame.
But President X or Y don't cause gas prices to go up, and people here on DA should be smart enough to know that. World events and other factors (wars, regional conflicts, shipping attacks, refinary fires, supply & demand, pure greed) are what screw with gas prices. A president can try to mitigate a price spike by releasing oil from the SPR for instance, but that's mitigating it afterwards, not the cause.

There will always be fallout from history and major world events, and a President can act to minimize its negative impact. But everytime I see people attach all the blame, or all the credit, to whoever is in the white house, I roll my eyes and ignore it.

I know who I will vote for, and who I will not vote for. But I also know that, while a president isn't completely impactless on the economy, it's a drop in the bucket compared to external factors and world events that will happen, regardless of who is in the white house.

So, to come back to the OP, I don't know if it's worth the worry lines to try to guess who will be in the white house and upend one's long-term financial planning based on that. I'd look much more at world stability/instability. But it seems like you balanaced things and split them down the middle, which is probably a good way to go -- especially because even if one guesses correctly, that doesn't always mean conventional wisdom will happen! (look at stocks vs bonds over the last couple years).
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Blade
  |     |   49 posts since 2018
On the original topic of the election and future interest rates... My guess is Biden would be best for higher future CD interest rates. Trump will always be a real estate man at heart. It's what he was raised with, made the bulk of his fortune with and knows best outside of reality TV. Real estate investing always thrives best with low interest rate loans. As such, I've always felt that colored Trump's feelings on interest rates during his term. He can't help but view rates as a real estate investor would as that's who he is at his core. Just some pop psychology for you! As usual, the election will come down to a handful of swing states and, since I currently reside in TX, it really doesn't matter who I vote for this time around. My state will go Republican yet again with or without me.
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Kaight
  |     |   1,192 posts since 2011
Good comment. Thanks. As I wrote in the OP, my gut also associates Trump with lower rates. But I think your reasoning is better than merely my gut. I like it.
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Kaight
  |     |   1,192 posts since 2011
It has been over a week since I posted the OP. I remain more at sea than ever in terms of being able to pick the election winner. The stupidity of Republicans was confirmed once again by ability of the D'crats to tie them in knots on this bogus immigration initiative. The D'crats are wildly better at politics than are the R's.

I have money to invest in CDs now and dearly wish I could arrive at a conclusion on this matter. It could end up being decided by our lady voters on the issue of abortion. The skillful D'crats will easily convince our American females that Trump will do away with their cherished right to kill their babies regardless the state in which they live. That aspect alone could be sufficient to turn the tide to Biden. Of course Trump will deny this. But many lady voters do not believe Trump. Period.

We are now less than one year away from inauguration day, January 20, 2025. So one year CDs beckon if it's gonna be Biden taking the oath once again.  And the APYs on one year CDs are quite good, too.  But should Trump somehow prevail instead, one year CDs are gonna stink out loud. So I'm looking one year minimum term length, going out longer provided the APY is decent. I continue to avoid five year CDs. The risk of a Biden victory is simply too high.
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