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larryB said:Greatly diminished choices and longer maturities have gone away. Because of Bank holiday or a tipping point in rate expectations? Same at Fido and Vanguard?
Greatly diminished choices and longer maturities have gone away. Because of Bank holiday or a tipping point in rate expectations? Same at Fido and Vanguard?
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Next Fed rate increase (50bp?) is not until Dec. 14th.
That's got my vote. There's a massive number of older investors out there who have been starved for decent fixed income rates for many years now. They, like me, have been watching this interest rate environment with great attention.
There's speculation, based on only one month's report, that the FED may now slow down or even pause interest rate increases. So that was the signal to BUY NOW!!!
And they did. The shelves are now empty of the best stuff.
Personally, I'm not at all impressed by that one inflation report, but we shall see.
Add: I was quite surprised to see the dramatic change in the offerings at Schwab between the morning yesterday when I bought, and the late afternoon. Wow.
The Nov. inflation report comes out on the 13th, and the Fed meeting is the 13th-14th. Even if McCully's right, there's a month for yields to maybe bounce back some before then.
I read your post before the delete. Nothing you wrote was out of bounds here.
Discussions about investing are the forerunners of making decisions about trades; be they CD's, MMKT funds, traditional mutual funds, plain vanilla etf's, sector etf's, exotic etf's or 1 stock share or 1 bond.
Continue to write and express.
I agree with @carew388, this week's CD activity could have been FOMO. "Guilty" here of that charge, as I hurriedly bought on Thursday. Even with CDs, it's gotta be difficult. Nothing ever goes in a straight line.
There is a lot of foreign selling as Governments try to defend their currancies against a strong dollar. This may ease somewhat.
Still with increased supply compared to QE for last what 10 years?, prices will drop, and yields will go up.
1) Inflation is much higher than CD. You lose money.
2) High inflation most likely will go down, 1-2 years from now. This is why you can't get CD for 10 years. I see 5 years at 4.95%. Good chance, it will be higher than inflation in a few years.
3) Short term is the sweet spot at 3 months. Treasuries are better, they pay more than CD and you don't pay Fed taxes in a taxable account. It's also easier to buy big amounts. This allows you to invest later in bond funds with a good possibility to make 10+% from the bottom (maybe in already) in 12-18 months after rates will stop going up. Remember, bonds have one of the worst first 6 months in history and a good chance to recoup all their losses.
4) I don't like to lock my money for even 3 months as a bond OEF trader. I traded several times in 2022 successfully, and a good trade can come any day. MM paying over 3.7% or more is pretty good too.
One can also build a treasury ladder with 13 week, 26 week and 52 weeks treasury bills with your favorite brokerages. Funds will be available every 3 months as the treasury matures. As the rate get higher you can buy a new treasury bill at a higher rate.
If you want flexible, have enough cash aside in money market funds that are yielding a respectable 3.2% with Fidelity and Vanguard.
I was talking only about buying and selling treasuries at Schwab+Fidelity in auction/ secondary market. I don't want to deal with other accounts and the Gov. You can hold to maturity or sell earlier.
I always want total flexibility and never locking anything.
The banks have scurried away like cockroaches after you've turned on the lights. And somebody flicked that giant light switch last week (CPI report reaction).
Longer term CD's near 5% might come back, but for now it seems questionable.
Not quite 5%, but KS State Bank is offering 3-, 4-, 5-, and 7-year CDs with 4.99% APY.
Interest compounds and pays quarterly. Interest can be deposited to another account (rather than reinvested) only if account is opened at one of their seven Kansas locations.
Early withdrawal penalties range from 12 months interest (3-year CD), to 15 months (4-year CD) and 18 months (5- or 7-year CD).
Note: it sold out quickly.
Auction today for 13 week and 26 weeks treasury bills are yielding 4.2% and 4.6%, respectively.