Tuesday, October 14, 2014

There's a Sucker Born Every Minute: 5 Year CDs

The following chart shows the yield that savers are currently getting on 5-Year CDs at banks and what they could be earning by buying 5-Year Treasury Notes from the government directly.

Click to enlarge.

Extreme Suckering!

1. Am I referring to the typical 5-Year Certificate of Deposit buyer getting far less yield than what could be earned on a 5-Year Treasury Note?

2. Am I referring to banks not generally informing CD buyers of this difference in yields?

3. Am I referring to the staggering and unprecedented gap between the two yields?

4. Am I referring to the staggering and unprecedented number of days that this has happened in a row?

5. Am I referring to investors in bank stocks who believe this banker's wet dream can go on forever (pardon my language)? That nobody will notice? That nobody will start posting about suckers being born every minute?

6. Am I referring to the seemingly widespread belief that it is absolutely impossible for the 5-year Treasury Note yield to actually drop from here (to more closely match what banks are generally paying on CDs)?

7. Am I referring to those who believe James Bullard when he says that the markets are wrong about the timing of interest rate hikes?

8. Am I referring to all of the above?

You make the call.

Source Data:
St. Louis Fed: Custom Chart


Anonymous said...

Some of us don't care about interest rates. We have no money.
Love the recovery so far.

Stagflationary Mark said...


My girlfriend doesn't care much about rates either. She has no money or job. Sigh.

She goes in for yet another interview today though. Crossing fingers.

Anonymous said...

Interviewing IS a full-time job. No time to devote to actual working.

Stagflationary Mark said...


Interviewing IS a full-time job.

Based on the # of hours she's interviewed so far for one job, who am I to disagree!