Treasury yields surge

At the center of the storm of this week’s market turmoil is the 10-year Treasury yield, one of the most influential numbers in finance.

Central banks are now playing catch up with the yield curve

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But CD rates aren’t rising at 5/3. A CD matured yesterday. Looked on their web site this morning. Still the best rate I can get is 5%, same as 4 months ago.

Steve

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If you limit yourself to one bank, you only get what they offer. A week or two ago (as I mentioned on a different post), I snagged a 5.55% CD (at one of my brokers). Those higher yielding CDs usually disappear from inventory pretty quickly. Today the best I see available is 5.50% (at 30 or 40 different banks). The other advantage of buying CDs at a broker instead of at a single bank is that if you buy >$250k, you can diversify your FDIC coverage to ensure coverage of all of them. At a single bank this is substantially more difficult to accomplish.

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This is in a trust for my aunt. 5/3 is offering 5.00% for 7 months. PNC is offering 4.75% for 7 months. BoA 5% for 7 months. These are their “promotional” rates. For a “regular” CD, 5/3 is offering 0.01% for all amounts and maturities.

Steve

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I guess that’s their way of saying they don’t want your money. Or anyone else’s.

WTH

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A bond is a contract to pay a specified interest amount at a specified time. When 10 yr interest rates rise, that implies market price of the bond is falling. So people are selling rather than buying 10 yr bonds.

Why?

Similarly falling interest rate for two years implies people are buying two years?

Why?

You probably buy the two year when you think interest rates will rise some more. You should be buying longer bonds when you think interest rates have peaked.

Please explain.