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There’s a new top dog when it comes to yields on 1-year certificates of deposit, according to an analysis by Stephens. Bread Financial now has the highest annual percentage yield for 1-year CDs among banks in Stephens’ coverage at 5.6%. However, the online bank didn’t reach the top by raising its APY. Instead, it was because LendingClub slashed its 1-year CD yield by 10 basis points to 5.55%, analyst Vincent Caintic said. A basis point is equal to one one-hundredth of a percent. In fact, no banks under the firm’s coverage boosted their yields from the prior week — and the analyst thinks that trend may have taken hold. “After last week’s inflation number changed market expectations for Fed interest rates (no more expectations for rate increases, and perhaps sooner rate cuts) we think the period of online bank rate increases may have come to an end, at least if market predictions prove true,” Caintic wrote in a note Monday. What’s more, banks may follow in LendingClub’s footsteps, he predicted. That means investors could be running out of time to lock in the juicy yields of late. “Online banks had already been cutting 1yr CD rates and this may likely continue as near-term rate expectations fall,” Caintic said. The Federal Reserve’s rate hiking campaign had sweetened APYs on CDs, which allow investors to lock in a rate for a certain duration of time. The rates on savings accounts, on the other hand, can fluctuate. Both are insured up to $250,000 per depositor, per bank by the Federal Deposit Insurance Corporation. The Fed meets in December and has indicated another rate hike remains possible. However, fed funds futures pricing data suggests a 99.8% probability that rates will remain unchanged, according to the CME FedWatch Tool . Investors also expect the central bank to start aggressively cutting rates in 2024. However, Chicago Fed President Austan Goolsbee said last week that there is ” a way to go ” reaching the Fed’s inflation target of 2%. During the press conference after November’s meeting, Chair Jerome Powell said officials are “not thinking about rate cuts right now at all.” — CNBC’s Michael Bloom and Jeff Cox contributed reporting.
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