As of 5 pm EST 9/24/2024, 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: 4.75% (Umpqua Bank OR – sold out), 4.70% (Flushing Bank NY, Main Street Bank MA, PeoplesBank MA), 4.65% (Merchants Bank of Indiana IN)
6-month: 4.55% (State Bank of India NY – sold out), 4.45% (Bank Hapoalim BM NY, Fulton Bank NA PA)
9-month: 4.20% (Live Oak Banking Co NC – monthly), 4.10% (BofA)
1-year: 3.95% (Farmers Bank & Trust Company AR– monthly, State Bank of India NY, Transportation Alliance Bank, Inc. UT - monthly)
18-month: 3.80% (Axos Bank CA - monthly, Bank Hapoalim BM NY, MSB, MSPB)
2-year: 3.75% (Axos Bank CA - monthly, MSB, MSPB)
3-year: 3.70% (Axos Bank CA - monthly)
4-year: 3.60% (BMW Bank of North America UT – sold out)
5-year: 3.60% (American Express National Bank UT), 3.45% (BNY Mellon NA NY), 3.25% (GSB)
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: After last week’s 50 basis points cut, the Fed funds rate is 4.75% - 5.00%.
The new FOMC Summary of Economic Projections Median forecast for the projected appropriate policy path of the Federal funds rate is:
November 8: Cut 25 basis points to 4.50% - 4.75%
December 18: Cut 25 basis points to 4.25% - 4.50%, End of 2024: 4.40%
Jan 2025 – Dec 2025: Gradual total cuts of 100 basis points to 3.25% - 3.50%, End of 2025: 3.40%
2026: Gradual total cuts of 50 basis points to 2.75% - 3.00%, Terminal rate: 2.90%
The next FOMC SEP policy path update will be December 18.
Will the Fed easing (cutting fed funds rates) into a relatively strong (income/service/spending) economy, lead to a yield curve steepening (longer rates rising)?
We know more cuts are coming quickly, as a matter of accommodation, not recession. Inflation has come down significantly but is far from over. So even though the Fed may continue to cut (short rates) fed funds rates, it also is continuing to reduce its balance sheet.
Will the Fed be able to get short rates lower fast enough, before measurable inflation picks up enough to change their policy? We have repeatedly been told that monetary policy works with long and variable lags. Yet former St. Louis Fed Bullard has told us not so, it filters through today’s economy very quickly.
And finally, by December 18, could we see the 10-year Treasury yield jolt higher, disrupting the Fed’s current longer-range projected policy path?
For those staying liquid, here are the previous ten weekly 4-week T-bill auctions most recently yielding investment rates: 4.783%, 5.053%, 5.171%, 5.263%, 5.335%, 5.355%, 5.381%, 5.381%, 5.381%, 5.365%.
As of September 18, ICI reported to the Federal Reserve that $6.30 trillion of cash is parked in money market funds. This is a decrease of $20.02 billion from the prior week. Current Money Market yields at Vanguard are (VMFXX (Settlement fund) 4.98%, VUSXX 5.13%, VMRXX 5.00%).