CD/MM rates stabilizing?

Comments

• larryB

  9:38AM

  @dtconroe. Welcome back. The question you pose is one I ponder daily as my overweight CD ladder spins off interest and old CDs mature. I remind myself that today’s rates are still much higher than those during the lowest period of ZIRP,,,, and if stability matters , the world we live in is way less stable thanks to you know who. Chasing yield while enduring unstable or declining principal is not for the likes of us. I admit to building a substantial position in two short duration bond ETFs but the golden age of nice risk free returns is over. We can’t forget what is MOST important for us
• Level5

  11:54AM

  @dtconroe - CD, MM, and treasury rates no longer hold the same draw for this retiree. Though I’ve dabbled in 5 & 10-yr tips this year, as well as a few individual agency bonds (under 4% yield), I haven’t been interested in the longer term individual bonds (with their somewhat higher rates), even while the MMs have slowly dropped (now 3.6x at VG).
  
  As our treasuries have matured, I’ve shifted into funds with short duration such as NEAR, DHEIX, VCSH. I especially appreciate the flexibility of etfs.
  
  RMDs have increased our taxable MMs so I’ve been looking to invest some of these funds into state tax exempt vehicles like agencies, and muni funds such as VTEI and CGMU.
  
  Still, MM yields at VG provide stability and dry powder.
• DrVenture

  1:30PM edited 1:30PM

  dtconroe said:

  I keep monitoring CD and MM rates as a safe component of investing. At Schwab MM rates are treading water around 3.5/3.65% as top rates. CD rates have a slight bias for better returns for longer term CDs: 3mo/1yr at 3.8%, 2yr at 3.85%, 3yr at 3.9%,, 4yr at 3.95%, 5 yr at 4%, 10yr at 4.1%. As a retired person, does this trend have any significance for what you as a retired person, focusing on stability, is choosing to do.

  It does seem to signify that FED funds rates are not expected to continue downward. If higher inflation expectations for 2026 are realistic, rate cuts will evaporate.
  
  This trend probably applies to other fixed income as well, so my allocations to bond CEF and OEF may benefit. I could increase those allocations. Particularly if U.S. equities continue to struggle.
  
• dtconroe

  2:34PM

  DrVenture said:

  dtconroe said:

  I keep monitoring CD and MM rates as a safe component of investing. At Schwab MM rates are treading water around 3.5/3.65% as top rates. CD rates have a slight bias for better returns for longer term CDs: 3mo/1yr at 3.8%, 2yr at 3.85%, 3yr at 3.9%,, 4yr at 3.95%, 5 yr at 4%, 10yr at 4.1%. As a retired person, does this trend have any significance for what you as a retired person, focusing on stability, is choosing to do.

  It does seem to signify that FED funds rates are not expected to continue downward. If higher inflation expectations for 2026 are realistic, rate cuts will evaporate.
  
  This trend probably applies to other fixed income as well, so my allocations to bond CEF and OEF may benefit. I could increase those allocations. Particularly if U.S. equities continue to struggle.
  

  That was one of my observations. It seems that major banks like Goldman Sachs and Morgan Stanley are offering up longer maturities in the 4%+ range, which tells me they are confident that there is minimal chance that we will see the FEDs cutting rates. At my age, I am not inclined to go out very far on the maturity scale, but I am not worried as much about rates dropping much lower
• Old_Joe

  2:55PM edited 2:59PM

  With virtually all of our present investments in Treasuries, MMkts, and Cds, I too keep a daily watch on all of that stuff. I've noted that SUTXX MMkt at Schwab seems to have stabilized at 3.54%, and on 2/3/26 added a 1-year CD at 3.8%. We aren't going out much more that 1-2 yrs because of our ages and the uncertainty of anything that is remotely touchable by our dear leader.
  
  Of course the Fed is under terrific pressure from you-know-who, but even a new Fed president is only one vote, and I don't see inflation going down significantly in the near to medium future.
• equalizer

  3:08PM

  A flattening yield curve may indicate slowdown in the economy.
• Old_Joe

  3:13PM edited 3:14PM

  That falls under the "uncertainty of anything that is remotely touchable by our dear leader" clause.  
• dtconroe

  3:35PM

  Old_Joe said:

  With virtually all of our present investments in Treasuries, MMkts, and Cds, I too keep a daily watch on all of that stuff. I've noted that SUTXX MMkt at Schwab seems to have stabilized at 3.54%, and on 2/3/26 added a 1-year CD at 3.8%. We aren't going out much more that 1-2 yrs because of our ages and the uncertainty of anything that is remotely touchable by our dear leader.
  
  Of course the Fed is under terrific pressure from you-know-who, but even a new Fed president is only one vote, and I don't see inflation going down significantly in the near to medium future.

  Yep, at this point I have not been willing to go out any farther than a 2 yr CD that pays 3.85% at Schwab . I am maintaining some money in SNAXX and have several CDs maturing this year. I will say that I moved a large amount of money out of a taxable account at Schwab, to some local banks and credit unions that are paying 4% on 1 yr CDs. I am 78 and am protecting assets for my wife's liquidity needs, in case something happens to me. Early redemption fees are only 3 months interest for CDs at local banks
• DrVenture

  4:22PM

  equalizer said:

  A flattening yield curve may indicate slowdown in the economy.

  Let's add that to the list!