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Comment by koolba | Hacker News Reader

FDIC insurance would be the real gain here. That’d cover accrued interest as well.

4.75% perpetual FDIC insured CD vs 30 year treasuries paying about 3.8% right now is interesting.

Locking yourself into an interest rate for a long time period right now is like buying the stock market at the top. Get a high interest savings account with Wealthfront at 4.55%, for example. You’ll be glad you did when rates hit double digits over the next decade. Rates aren’t going back to zero ever.

interest rates have been falling for over 700 years [1]. I wouldn't bet against that over a single unprecedented year

1. https://www.bankofengland.co.uk/working-paper/2020/eight-cen...

It is more than a single year and this happened during the 1970’s and 1980’s stagflation era.

Of course worse inflationary crises have happened in Western history and while they returned on a large enough time scale that really didn’t matter all to much for all the poor citizens for whom their hard earned wealth was nukes from orbit.

Isn't this cherry picking data?

Your time machine is as good as mine. Rates can keep going up and up and up like the 70's, or they could crash back down when AI and robots put us all out of jobs, or the dollar could become worthless along with everything else after a nuclear holocaust.

You can do both to hedge that interest rate risk. Some fixed, some floating. No one knows where rates are headed and savings account providers can change rates at any time.

A number of very large brokerages have short-term largely treasury accounts returning in the 4-5% range right now. I wouldn't toss all my money there but it seems like a pretty good place to park cash for the next year or two until rates drop.

There's a 10 year interest penalty for early withdrawal.

That doesn't seem like a good deal at all then. The brokerage accounts are basically "like cash" sweep accounts.

The deal is in locking in the interest rate forever.

Of course, this is only a great deal if the money is taxed at a very low rate and your horizon is very, very long.

Short term treasuries are paying more than that. 6 month is at about 5.3% and that’s State tax free.

Bond yields can only be compared apples to apples at similar durations and at similar credit risks (which FDIC insurance normalizes).

What's interesting is that until very recently, the interest rate on treasury bills were higher for shorter term ones versus longer term. That is, the 4 week ones had a higher interest rate compared to the 26 week ones. In fact, the daily treasury bill interest rate for May 26, 2023 was

    5.78% for 4 weeks
    5.30% for 8 weeks
    5.16% for 13 weeks
    5.28% for 17 weeks
    5.18% for 26 weeks
    4.98% for 52 weeks

[1] https://home.treasury.gov/resource-center/data-chart-center/...

This is the famous inverted curve. It’s generally been a predictor of recession. But this time it’s been inverted for over a year with no recession (yet).

One of the many baffling parts of the economy currently.

The yield curve inversion to recession lag is typically around 18 months (with big error bars), so it’s not super notable yet.

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