Now that the 5-year Treasury yield is rising, banks are standing pat, with the national average 5-year CD rate at 0.30%. But during the early months of the pandemic, banks held 5-year CD rates relatively stable at already very low rates.
Banks have been pushing customers away from 5-year CDs for several years, preferring to offer attractive 11-month or 1-year CD rates, which can bring new customers into the door.
That shouldn’t be happening, but here we are.Īs this chart shows, this isn’t an unusual situation. On my way to look something else up, I noticed something interesting: The yield of the nominal 5-year Treasury note has been rising nicely over recent weeks, but yields of 5-year insured bank CDs remain stuck at very low levels.
