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Highest Brokered CD Rates As Of 7/16/2024

Kirkland
  |     |   377 posts since 2014

As of 5:30 pm EST 7/16/2024, here are the highest rates available at either Charles Schwab brokerage and/or Vanguard brokerage for non-callable, new-issue brokered CDs with terms of 3-month, 6-month, 9-month, 1-year, 18-month, 2-year, 3-year, 4-year, and 5-year:

3-month: 5.25% (Independent Bank TX, SoFi Bank NA UT, Umpqua Bank OR)

6-month: 5.20% (Independent Bank TX)

9-month: 5.00% (BofA)

1-year: 4.85% (BofA)

18-month: 4.80% (MSB)

2-year: 4.60% (MSB, MSPB)

3-year: 4.55% (Customers Bank PA)

4-year: 4.50% (Customers Bank PA)

5-year: 4.35% (MSPB)

Large issuers abbreviations:

BofA => Bank of America, NC; GSB => Goldman Sachs Bank USA, NY;

MSB => Morgan Stanley Bank, UT; MSPB => Morgan Stanley Private Bank, NY;

SCHW => Charles Schwab Bank, TX; UBS => UBS Bank USA, UT; WF=> Wells Fargo Bank, SD.

Notes: Brokered CD short rates have really dropped in July. Market has quickly priced multiple 25 basis points cuts going forward. In late June, 5.35%, brokered cd interest payable monthly, was available out 1-year, now is available at maturity at only 4.85%. Market consensus is that fed policy is too tight and that cuts in rates will be made to bring rates in line with actual economic growth and reduced inflation. In addition, Jerome Powell, on 7/15, stated that latest data in the second quarter “added somewhat to confidence” inflation is returning sustainably to 2%.

For those staying liquid, expecting cuts not to materialize, or only a one and done recalibration cut later this year, or waiting for the yield curve to steepen (longer rates to rise) and/or waiting for the bond vigilantes to appear, demanding higher longer rates, here are the previous five weekly 4-week T bill auctions most recently yielding investment rate: 5.365%, 5.375%, 5.365%, 5.324%, 5.355%. Current Money Market Yields at Vanguard (VMFXX (Settlement fund) – 5.28%, VUSXX – 5.28%, VMRXX – 5.29%). With T-bills and Treasury Money Market VUSXX, your interest income is state/local income tax free.

From Wikipedia, “A bond vigilante is a bond market investor who protests against monetary or fiscal policies considered inflationary by selling bonds, thus increasing yields.”

MSB, MSPB rates partially posted at Schwab brokerage, but not yet posted at Vanguard brokerage.

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20


w00d00w
  |     |   360 posts since 2012
brokered CD rates are just, for the most part, hugging the treasury benchmark rate. good for the issuers if they can get purchase while paying little to no premium above the treasury rate.
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4
w00d00w
  |     |   360 posts since 2012
looking at the Vanguard yield page, it appears that the most favorable spread between the benchmark treasury rates and the new issue, non-callable brokered CD rates are for CDs in the 4-5 year range. the best brokered CD rate for those terms exceeds the treasury rate by 0.2% to 0.3%. the least favorable spread is in the 10+ year category where the best brokered CD lags the treasury rate by about 0.3%
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5
happyharold4
  |     |   390 posts since 2022
Helpful---Thanks for the effort in putting it together.
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5
RichardW
  |     |   821 posts since 2019
Thanks Kirkland! As of 7:00 pm EDT 7/17/2024, the highest rates available at Fidelity for non-callable, new-issue brokered CDs with terms of 3-year, 4-year, and 5-year are lower than the rates you posted on 7/16/2024. The highest rates at Fidelity are 3-year: 4.50% (Sallie Mae Bank, MSPB), 4-year: 4.30% (UBS Bank), and 5-year: 4.30% (Sallie Mae Bank).
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4
w00d00w
  |     |   360 posts since 2012
waiting for the yield curve to steepen (longer rates to rise)

it'll be interesting to see how the yield curve steepens. i'm not convinced it's going to happen by long term rates rising. other possibilities are that long term rates remain fairly steady while short term rates fall. another is that both short and long term rates fall, but the short end to a greater degree.

predicting future treasury rates is a task that some have dubbed "a fool's errand."  admittedly, it's enticing to try and predict if there is something to gain, whether it's a financial gain or just "bragging rights."  however the difficulty is such that even the Bond King, who just a few months ago expected the 10 year treasury to go back to 5%, has been proven wrong, at least in the short term.
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3


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