I see cd rates over 5% and money market accounts >4%

reps for the best recommendations, I've got cash sitting dead in a Chase savings account

Ally Savings.

do you recommend the bank you went through, or did you just use something convenient?

says 3.4%, is that right?

Goldman Sucks has a Money Market over 4%

Pfft. Like I'm going to tell you I have $500,000 cash under the mattress in the bedroom to the left down the hallway at 1857 Pebble Stone Ln, Sweet Water VA.

Ha.


I'm not stupid

Buy 30 year T-bills, DFS.

So 30 year T-Bills right now pay substantially less than 1 year T-Bills. You know why? Because big money is buying all the 10 and 30 years, and fukking Heisman stiff-arming the short term notes that guarantee a loss to inflation (and are backing your CD).

The catch is that bonds have a re-sale value. You can basically calculate it by the total payout left on the bond, minus the cost to replace that bond at today's interest rates. Older bonds with high interest rates are worth more if newer bonds have lower rates.

If you bought $10k in 4% 30 year bonds today, and interest rates cratered to 1% tomorrow, it would take me $40k in 1% bonds to generate the same return that your 4% note has. So that's what its resale value is. Your $10k bond just quadrupled in value to $40k.

And that's exactly what institutional funds are doing. They know the Fed can't keep interest rates at 5% for long, and Powell will have to cut. Who knows when that date will be, but it will probably be in 1-5 years.

So when the Fed cuts interest to 0% and drops a fresh round of QE stimmy on the market, 30 years drop back down towards the 2% return they've averaged since the GFC, and long-dated bonds ("duration") will double in value.

Buy a 30 year bond. Heads, you get a guaranteed 4% return every year. Tails, you sell the note in a couple years and double your money. It's a no phukking brainer. Phuck that 5% CD.

This is pretty good advice. Would like to add that any recent homebuyers in the past few years might especially benefit when factoring in that their mortgage interest rate is probably lower than what current 30yr bonds are paying. You could theoretically allocate capital to "paying off your mortgage" by buying 30 year bonds, which would offset some of the mortgage interest paid, but also have the opportunity that those 30 years bonds will be worth more in the event that interest rates crash. If not, the bonds are still paying more than the mortgage interest and act as if you had just paid down a little more on your mortgage.

Bottom line, from a mortgage interest rate perspective, recent mortgagecells are in a fortunate situation that hasn't presented itself in years.

FWIW, I do think it is a little early for the 10/30 year, but it should be on peoples radar nonetheless. I think interest rates are going to rise a little longer than what people are expecting.

My understanding is that the yield increases when there are fewer buyers for the bond. From CNBC:So I'm with you so far...and we aren't in inversion so yay?
Now I'm not exactly following. Why do you feel certain that bond yields will be going down?
I'm with you on the 4%.

But not with the assertion that the Fed lowering the prime rate [the rate at which banks lend one another excess reserves -- reserves they don't need to satisfy capital requirements -- overnight] and issuing more treasuries will cause the yield on treasuries to go lower.

AFAIK interbank overnight lending is kind of a dead issue given that the Fed has essentially lowered the reserve requirement to zero and banks are parking their funds at the Fed to draw a completely safe return. Plus if yields on bonds *increase* when supply is higher than demand how will increasing the supply cause the yield to decrease? I don't see how increasing the amount of debt issued will magically grow the market to purchase that debt. Last I read Japan and China are actively dumping their US Treasuries...probably some other countries too. Mostly they seem to be wanting to invest in gold or other tangible assets.

I took some miscers advice and put my money in an ibond last october for a guaranteed 9%. I think it dropped some since but should still be at 6 or 7% for a 6 month period

Vanguard just created a new savings account that pays a bit over 4% which is where I park my spare cash. However its invite only I believe.

I would not put my money in a CD for the simple reason I don't want it locked up and untouchable or to pay a penalty to access. A CD at 10% or more might be tempting but anything less then that, nah. Not worth the opportunity cost.





Interesting. I've never bothered with bonds as a young brah but this sounds appealing.

Where do you buy these/are they traded in normal exchanges?

Katya, I think FA****g0t is making the assumption that he thinks the fed can't keep interest rates this high longterm and will have to lower interest rates. More than likely through something similar to QE ie buying bonds, thus increasing bond demand.I made that thread and you are correct (6.89%) according to quick google search. I also dropped the max $10K (for myself) I could for this calendar year as well.

Well the Fed returning to buying all of the things would make sense. Of course that would be a full reversal for their current policy of tightening/shrinking their balance sheet.

For anyone interested in such esoteric subjects I believe these videos make a good case for the impotency of the Federal Reserve. They can try to manipulate market sentiment via policy statements, but as far as having real control of the money supply- they don't have it. Being the reserve currency too much of the US$ supply exists outside the US banking system. They can jigger the rate around to try and create a psychological response, but it's sort of like a toddler mashing buttons on a TV remote- random effects may occur, maybe even some that are desired, but real control is an illusion.

staking cryptos

Marcus by Goldman Sachs. 4.75% currently
Use the link below and you will have 4.75%

https://www.marcus.com/share/KAN-15B-RBYQ

Exactly. I think QE's coming back.

Notice to wannabe bondcels in this thread, you can lose money on re-sale for bonds too. If you buy a 4% bill, and rates hike to where we see 6% T-Bills, you'd have to offer a discount to move your old bond. No one would offer you face value when they can just buy a better bond brand new from the govt.

But worst comes to worst, you can just hold onto your bond and keep pocketing the coupon payments. And I think we are pretty close to maximum interest rates already. The govt has more room to slash than to hike at this point IMO.The Fed basically can directly control the short end of the yield curve. They set the inter-bank lending rate, so short term bonds aren't going to stray too far away from that. You won't see a huge gap between "what you can get lending to JP Morgan for 3 months" and "what you can get lending to the government for 3 months."

Longer term, the Fed has less and less control. They can still suppress the long end by just buying everything and artificially raising demand/lowering yields, but their short-term interbank rate has less effect.

Right now, the Fed is boosting the hell out of the short end of the curve with aggressive interest rate hikes, but the long end has really been bought heavily. And with no QE, it's all been market demand.

That's led us to our current, completely phukked up yield curve.



A normal yield curve, where investors get fairly compensated with higher returns for their higher time risk taken, looks like this. From March 2002.



The current yield is basically a symptom of severe financial distress... the govt pushing hard on the short end, and big money hedging on the long-end. Either to shelter their money from short term financial calamity, or to cynically bank on an interest rate cute later.

Fukken nuts that QE was an extraordinary measure like 10 yrs ago. Now the market basically expects it - is addicted to it.

Agree the market won't sustain rates much higher than they are now. Rate cuts probably coming up. I'd like to hope they reserve QE for something truly extraordinary tho.

If you watch the Wealthion finance channel on youtube/rumble, their main theory is that the fed will continue to raise interest rates and/or keep them elevated until something breaks, thus forcing the next round of QE.

This theory makes alot of sense if you believe the US Gov would cease to exist without cheap interest rates to service their debt.

https://www.youtube.com/@Wealthion

Gotcha.
I've seen loads of people saying the Fed will hike until something breaks. Not so many saying that they will then swing in to a new round of QE, only that they will pause and/or begin to lower the rate again. I agree that the US can't afford to carry our debt under a high interest rate.

Not so sure that the US government would cease to exist though. There is a fair sized group that say the next step is simply default/reset. What can not be paid will not be paid...and this is for government debt in the US and also pensions in the EU/UK.

I recently pulled funds out of my Webull account, and signed up for this.

I just changed my 401k from 3% to 6% at work, taking advantage of my company's match up to 5%. Going to save the rest for a house. Das it mane.

A while back Powell stated their current target is %5.1. He also said that inflation and job growth aren't responding as they anticipated and if they don't cool down we will have to go higher than 5.1

I'm kind low IQ and new to this. Why do so many people thing interest rates won't continue to rise for the forseeable future, is there a reason as to not take Jerome Powells words at face value.

Digital pictures of cartoon monkeys.

I think the rates will go higher for the foreseeable future and it looks like the market is realizing that too. To get inflation and job growth to come down you typically have to break something, in this case the economy. Higher interest rates will do that, it just takes time.

They might have already broken it, or might still need to go more, but the bottom line is they will more than likely keep going until it breaks.

How would you define the "break" in terms of "the economy" in more specific terms?

SWVXX.

Currently paying 4.48%.

Savings is just for the emergency fund and near-term expenses (vacations). That's spread between savings accounts, high yield accounts, and a CD-style account where I'm OK giving up the interest if the money is needed for a true emergency.

Everything else into mutual fund investing

Significant price crash in short amount of time in equity markets.

Significant price crash in short amount of time in housing markets.

Significant rise in unemployment in short amount of time in job markets.

A good way to classify "break" is significant fear among population and sentiment there is a high probability things won't get back to normal.

The economy (GDP) is roughly ~70% consumer spending and if you break the examples above, consumers stop spending and economy goes to chit. This is all very broadly speaking of course.

I get your overall point - that's why I engaged.

I don't see those three happening in conjunction, nor two of those three (the latter two) at all. When there were housing dips during COVID they were short, because folks were snapping them up for a song.

What makes you think that rising rates could lead to these? Apologies if I missed reasoning here, but ITT I'm seeing lots of: "This could happen, so phi(X)". But I'm not sure investment strategies covered here make sense for OP, who may have a decently significant amount of money pooled.

In 4 later

2 big angles.

1. economic distress. The US economy is basically addicted to cheap debt after a decade of it. About 10% of US companies are "zombies" who can't survive without more debt infusions. Almost 40% of the stock market growth since 2010 has been due to buybacks, which are fueled by cheap debt. Cut off the flow of easy credit and the post-GFC US economy just crashes.

It's almost like an alcoholic at this point... we need to quit drinking, but the withdrawals could kill us. I think Powell will keep us drinking.

2. the federal deficit. Most of the government's debt is in short term notes - the median T-Bill is 6 years. If interest rates stay elevated for one or two years, the govt will basically re-fi their own interest rates from 1-2% to 5%. With $32T of debt on the books, any increase in interest on those loans hits hard. More govt revenue would go to interest payments than to the military or Medicare.

And long term, I don't think they will deal with that. It's too tempting to cut their own loan payments with more QE.