The average 1-12 month CD rate increased by 11 basis points to 4.6%, according to Morgan Stanley.
Good news for income-centric investors: Higher yields in the certificate of deposit market will continue through the remainder of 2023. Banks hiked rates on CDs through the last two weeks of July, with the average 1-to-12-month rate rising by 11 basis points to 4.6%, according to Morgan Stanley analyst Betsy Graseck. One basis point is equal to one one-hundredth of a percent. The action has been especially fierce for online institutions.
She anticipates that deposit betas – a metric showing the extent to which banks are passing on the Federal Reserve's rate changes to savers – will continue to rise in the second half of this year. That's driven by pressure on deposit balances, lagged impacts from the Federal Reserve's latest quarter-point rate hike and competition from Treasurys and money market funds as interest rates stay high.
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