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Deal Details
Ally Bank is offering a 13-Month Select Certificate of Deposit at 4.60% APY with no minimum deposit.
Thanks to Community Member SUCHaDEAL for posting this deal.
Thanks to Community Member SUCHaDEAL for posting this deal.
Editor's Notes
Written by StrawMan86 | Staff- About this deal:
- Promotional term available through 2/8/2023
- No minimum deposit to open
- Interest compounded daily
- Automatically renews into a 12-month High Yield CD
- Your deposits are insured by the FDIC up to the maximum allowed by law
- Early withdrawal penalty will apply. APY is fixed for the term of the CD and is subject to change upon renewal.
- Please refer to the forum thread for additional details & discussion. -StrawMan86
Community Notes
About the Poster
Deal Details
Community Notes
About the Poster
Ally Bank is offering a 13-Month Select Certificate of Deposit at 4.60% APY with no minimum deposit.
Thanks to Community Member SUCHaDEAL for posting this deal.
Thanks to Community Member SUCHaDEAL for posting this deal.
Editor's Notes
Written by StrawMan86 | Staff- About this deal:
- Promotional term available through 2/8/2023
- No minimum deposit to open
- Interest compounded daily
- Automatically renews into a 12-month High Yield CD
- Your deposits are insured by the FDIC up to the maximum allowed by law
- Early withdrawal penalty will apply. APY is fixed for the term of the CD and is subject to change upon renewal.
- Please refer to the forum thread for additional details & discussion. -StrawMan86
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Top Comments
Edit: ^ The above has an argument against it depending on your view of how Feb-Apr CPI will impact the inflation component of the next i-bond rates. YMMV.
You didn't miss the boat at all btw, I just think this is a good time to buy. There's a lot of laymen inflationary talk and fearmongering going on but sharp traders who actually trade bonds are already looking ahead towards deflation here, and the retail interest-bearing products are going to catch up to that sentiment imo.
Anyway, in order after i-bonds if you don't need the money for 1-2 years:
1. 27-month (a little over 2 years but still) CD posted on SD today that was at 5%
2. 12-month t-bill (~4.65% or so, NOTE: This may be #1 if you live in a high income tax state)
3. CD like the one here for 4.6%
4. No-penalty CD at SallieMae for 4.4%
I actually think the liquidity with the SallieMae CD is worth the 0.2% as I said in my first comment, for the opportunity cost alone. I would rank it ahead of this Ally CD but curated it based on what you said. You never know what could open up and this is a hedge against rates rising higher due to unforeseen wage growth or other inflationary (from a CPE perspective) components that the Fed would use to justify more hikes than anticipated/priced in. Just my 2c, but anyway, buy the ibonds first this quarter.
1. The dot plot released in subsequent Fed meetings where Fed members provide forward guidance on the terminal rate.
2. The Fed's forecast of core inflation through 2024 and beyond (I believe they're looking at 3.1% long-run, but I might be off on that, don't want to check right now)
3. How 2-5y yields react to the above 2 points
4. How breakevens are pricing cuts moving forward. When, for how long, and how much as well as how aggressively.
With all that in mind, and this is really more of a thought exercise from a trading perspective than for consumers holding these products to maturity, I think the current 5y CD rates will have a positive real return as early as Q3 2024. I think less so of the US 5y mostly because it's trading at 3.5%, but even then I'd probably be long the US 5y rather than short.
I'm not intimately familiar with these banks' business models but a few of these rates, at a surface level, give off an "asleep at the wheel" vibe. The short bond trade is super crowded across funds and crowded trades usually don't go well.
If I were specifically in the market for 5y CDs (I'm not) I'd be buying them now, and I think this will be close to, if not the, secular terminal rate for this cycle.
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Thoughts?
1. The dot plot released in subsequent Fed meetings where Fed members provide forward guidance on the terminal rate.
2. The Fed's forecast of core inflation through 2024 and beyond (I believe they're looking at 3.1% long-run, but I might be off on that, don't want to check right now)
3. How 2-5y yields react to the above 2 points
4. How breakevens are pricing cuts moving forward. When, for how long, and how much as well as how aggressively.
With all that in mind, and this is really more of a thought exercise from a trading perspective than for consumers holding these products to maturity, I think the current 5y CD rates will have a positive real return as early as Q3 2024. I think less so of the US 5y mostly because it's trading at 3.5%, but even then I'd probably be long the US 5y rather than short.
I'm not intimately familiar with these banks' business models but a few of these rates, at a surface level, give off an "asleep at the wheel" vibe. The short bond trade is super crowded across funds and crowded trades usually don't go well.
If I were specifically in the market for 5y CDs (I'm not) I'd be buying them now, and I think this will be close to, if not the, secular terminal rate for this cycle.
CDs make money for the banks. They take your money, invest in treasuries and corporate bonds and make a profit on the difference. So skip the middleman and invest directly.
As far as i-bonds are concerned, that's a fair assessment, but I don't think we're going to 0.4% or anywhere near that low based on the calculation methodology for the inflation component of the bond. I think you'll still get a blended rate in the 5% range over the 12 months and can withdraw at month 15 shaving off 3 months of interest, with no state/local tax on the cap gain. It may be objectively a better move to just buy the 12 month bill instead and remove the guesswork for the May rate. If the math says so, then ok.
CDs make money for the banks. They take your money, invest in treasuries and corporate bonds and make a profit on the difference. So skip the middleman and invest directly.
And then why not Vanguard Cash Reserves Federal Money Market Fund at 4.36%, same $3K minimum.
Edit: ^ The above has an argument against it depending on your view of how Feb-Apr CPI will impact the inflation component of the next i-bond rates. YMMV.
You didn't miss the boat at all btw, I just think this is a good time to buy. There's a lot of laymen inflationary talk and fearmongering going on but sharp traders who actually trade bonds are already looking ahead towards deflation here, and the retail interest-bearing products are going to catch up to that sentiment imo.
Anyway, in order after i-bonds if you don't need the money for 1-2 years:
1. 27-month (a little over 2 years but still) CD posted on SD today that was at 5%
2. 12-month t-bill (~4.65% or so, NOTE: This may be #1 if you live in a high income tax state)
3. CD like the one here for 4.6%
4. No-penalty CD at SallieMae for 4.4%
I actually think the liquidity with the SallieMae CD is worth the 0.2% as I said in my first comment, for the opportunity cost alone. I would rank it ahead of this Ally CD but curated it based on what you said. You never know what could open up and this is a hedge against rates rising higher due to unforeseen wage growth or other inflationary (from a CPE perspective) components that the Fed would use to justify more hikes than anticipated/priced in. Just my 2c, but anyway, buy the ibonds first this quarter.
Fidelity defaults to a FZFXX Treasury Money Market fund that has 7-day yield of 3.93% as a core position:
https://fundresearch.fi
While Fidelity's SPRXX Money Market fund has a higher 7-day yield of 4.15% but is mostly commercial instead of treasury:
https://fundresearch.fi
Not sure how to determine if the extra % interest of SPRXX outweighs the potential tax savings of FZFXX.
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Fidelity 4.566 Yield = 3Mo, T-Bills
Auction Close Date 01/23/2023
How To Buy Treasury Bills, Treasury Notes, Treasury Bonds | Fidelity & TreasuryDirect (Step By Step)
https://www.youtube.com/watch?v=r...eMc
If I disable Auto Roll when purchasing, the T-bill cashes out.
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