I have a CD coming due on Tuesday. I looked at rates a couple of weeks ago and I was certain my next CD would be less than 5%. Short term rates were higher, but longer rates were lower and lower the longer the term.
I checked today to see what I could get. Low and behold ALL terms of CDs are suddenly above 5%, some much higher. This is confusing because everyone was saying CD rates would fall, fall, fall.
I'm not sure why this is happening, but I'm happy about it. [Reply]
I have a CD coming due on Tuesday. I looked at rates a couple of weeks ago and I was certain my next CD would be less than 5%. Short term rates were higher, but longer rates were lower and lower the longer the term.
I checked today to see what I could get. Low and behold ALL terms of CDs are suddenly above 5%, some much higher. This is confusing because everyone was saying CD rates would fall, fall, fall.
I'm not sure why this is happening, but I'm happy about it.
Some new inflation data came in a bit high. Pushed out rate cut expectations for now [Reply]
Originally Posted by ChiliConCarnage:
Some new inflation data came in a bit high. Pushed out rate cut expectations for now
I get that for the short term, but why are 5 year CDs suddenly above 5%? If the consensus is that inflation will drift to 3% or lower, why are long term CDs paying much higher than that? [Reply]
Originally Posted by Stewie:
I get that for the short term, but why are 5 year CDs suddenly above 5%? If the consensus is that inflation will drift to 3% or lower, why are long term CDs paying much higher than that?
Dunno, yeah, that wouldn't make much sense. Schwab has some from 3.9-4.2% for 5 year. Even that seems surprisingly high to me. [Reply]
Originally Posted by Stewie:
I get that for the short term, but why are 5 year CDs suddenly above 5%? If the consensus is that inflation will drift to 3% or lower, why are long term CDs paying much higher than that?
I've wondered this myself, but I developed a theory. I have no idea if it's right or not.
If you're a bank, you're typically making some long-term loans. If you pay me a 5 percent rate for 5 years, and then you loan that out to some sucker with a 30-year mortgage at 6 percent or a 10-year car loan at 8 percent, then you're making money.
That said, a JP Morgan CD that I had at 5.6 percent just called it in. That really sucks. I knew it was callable but didn't know how likely it was to happen. It was a 5.6 percent CD so I was really happy, but in the fine print they can call it and just give me my money back early, and they did that. It's the first time I've had that happen, so unless it starts happening more frequently with other banks I'll be avoiding JP Morgan CDs going forward. [Reply]
Originally Posted by Hog's Gone Fishin:
NVDA is for sure and it has Earnings Wednesday AH. I'm thinking about selling mine and letting the dust settle. I expect earning to be good and still sell off.
I hear that it'll likely have a big jump in one direction or the other. It's become my largest holding by a fair bit, so Wednesday is going to be a suspenseful day. [Reply]
Originally Posted by Hog's Gone Fishin:
I looking through my ETRADE analysis and can't find that. That doesn't sound high but it has this comment :
VDA's P/E Ratio is greater than 96% of other companies in the Semiconductors industry. This typically means that investors are willing to pay more for its level of earnings relative to future growth.
Originally Posted by Hog's Gone Fishin:
I looking through my ETRADE analysis and can't find that. That doesn't sound high but it has this comment :
VDA's P/E Ratio is greater than 96% of other companies in the Semiconductors industry. This typically means that investors are willing to pay more for its level of earnings relative to future growth.
Do you own NVDA Lewdog ?
I've heard that their earnings may double in this next report. P/E is going to be based on past reports, I think, so that may mean that their P/E will be in the 40s after Wednesday. Just speculating, and that may be why the price is spiking again this year. [Reply]
Originally Posted by Rain Man:
I've wondered this myself, but I developed a theory. I have no idea if it's right or not.
If you're a bank, you're typically making some long-term loans. If you pay me a 5 percent rate for 5 years, and then you loan that out to some sucker with a 30-year mortgage at 6 percent or a 10-year car loan at 8 percent, then you're making money.
That said, a JP Morgan CD that I had at 6 percent just called it in. That really sucks. I knew it was callable but didn't know how likely it was to happen. It was a 5.6 percent CD so I was really happy, but in the fine print they can call it and just give me my money back early, and they did that. It's the first time I've had that happen, so unless it starts happening more frequently with other banks I'll be avoiding JP Morgan CDs going forward.
5.6% is really high for a 5-year term, but you’re essentially correct. A bank will use the money you have in a CD and lend it out longer term. My previous bank would buy CDs on the secondary market to make USDA guaranteed loans, but the rates were typically variable limited to the term the CDs were purchased for. You can review a banks net interest margin to see how good a bank is at this. [Reply]
Originally Posted by UteChief:
5.6% is really high for a 5-year term, but you’re essentially correct. A bank will use the money you have in a CD and lend it out longer term. My previous bank would buy CDs on the secondary market to make USDA guaranteed loans, but the rates were typically variable limited to the term the CDs were purchased for. You can review a banks net interest margin to see how good a bank is at this.
My 5.6 was actually only a one-year, but they called it after six months. So it wasn't a huge loss, but it worries me a bit about other CDs that I'm holding. If they all start doing that, particularly the ones that are 3+ years, it's going to screw me over. [Reply]