Deposit Funding Compass Week of November 2, 2023

Federal Reserve Chair Jerome Powell hinted the US central bank may now be finished with the most aggressive tightening cycle in four decades after it held off on raising interest rates for a second consecutive policy meeting. Federal Open Market Committee left its benchmark rate unchanged Wednesday in a range of 5.25% to 5.5%. Officials signaled in a post-meeting statement that a recent rise in longer-term Treasury yields reduces the impetus to hike again, though they left the door open to another increase. The 10-year US Treasury yield tumbled below 4.75% for the first time in two weeks, extending moves initially triggered in the morning by the Treasury Department’s plans to slow the pace of increase in its long-term debt sales.
CD issuance has been tempered to start November, and this week’s rates reflect the benefit of that wait and see approach. Though pricing isn’t as dynamic as other asset classes we feel with a 2wk+ settle this more aggressive run of levels should begin to gain traction as supply is light. Money center banks aren’t moving off their pre-rally rates, but demand should pick up the slack even with spreads widening. Please see today’s funding opportunities.