As of 10 am EST 8/28/2024, 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: 4.95% (KeyBank NA OH, Main Street Bank MA)
6-month: 4.65% (Open Bank CA – monthly, Parkway Bank and Trust Co IL, Independent Bank TX)
9-month: 4.55% (MainStreet Bank VA – monthly)
1-year: 4.30% (First Bank of Berne IN), 4.25% (Bankwell Bank CT – monthly, BofA, GSB, MSB, MSPB)
18-month: 4.10% (BofA, MSB, MSPB)
2-year: 4.00% (State Bank of India NY)
3-year: 3.90% (MSB, MSPB), 3.85% (UBS - monthly)
4-year: 3.85% (MSB, MSPB), 3.80% (UBS - monthly)
5-year: 3.80% (MSB, MSPB), 3.75% (UBS - monthly)
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: If you want to lock in 5% CDs now, you have to look for those rates nationally or locally available via Direct Bank or Credit Union.
For those staying liquid, expecting a one and done recalibration cut in September, or expecting multiple cuts not to materialize until next year and beyond, 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 ten weekly 4-week T-bill auctions most recently yielding investment rates: 5.335%, 5.355%, 5.381%, 5.381%, 5.381%, 5.365%, 5.365%, 5.375%, 5.365%, 5.324%.
As of August 21, ICI reported to the Federal Reserve that $6.24 trillion of cash is parked in money market funds. This is an increase of $24.89 billion from the prior week. Current Money Market yields at Vanguard are (VMFXX (Settlement fund) 5.25%, VUSXX 5.25%, VMRXX 5.26%).
This week, Former Cleveland Fed Mester said, “a series of 25 basis points cuts seems appropriate for where the economy is now”. And Former St. Louis Fed Bullard said, he expects a “25 basis point cut in September”. On Friday, at Jackson Hole, Current Fed Chair Powell said, “the time has come for policy to adjust, the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
Predicting the pace of rate cuts involves the balancing of risks of falling inflation and a healthy, but moderating, labor market. It could take more time than the market thinks and we don’t know where the pauses and stopping point will be, but over the long run, the economy and the fiscal policies will also tell us, and as rates continue to normalize from here, the neutral rate may be quite higher than that thought before.
At the very least, it is prudent to lock in a minimal amount into the highest longest “guaranteed liquid rate” available for your liquid cash, that you can later add to. And it is prudent to lock in a minimal amount into the highest longest add-on cd, that for the longer run, you can later add to.
