by Wolf Richter
Wolf Street
There’s no need to still pay a “loyalty tax” to the banks.
It’s sort of an anniversary: Treasury bills of three months or shorter have been selling at auction with yields over 5% since mid-April 2023. And since mid-May 2023, they have been selling with yields in the 5.2% to 5.6% range. Money market funds and CDs followed. These were finally reasonable returns, up from the ridiculous near-0% that had been in effect until January 2022.
Yields on low-risk short-term investments have come a long way since March 2022, when the Fed’s rate hikes started, and they have stayed over 5% for a year, and it looks like they’re going to stay there for longer, as Rate-Cut Mania has been obviated by resurging inflation.