Inflation, Bonds, Overnight Reverse Repurchase Agreements, T-Bills and Commercial Bank Interest Rates and Apple Savings Account

Bond Vigilantes want Higher Yields!

The overnight repo rate at the FED is yielding banks 4.80% per day to park this cash at the FED, this is the highest yield since 2014.

The banks would rather buy the 1-month treasuries which were yielding more than 4%, with the highest yield at 4.62% on 04/03/23, since then, the 1-month T-Bill has collapsed. Seems like the banks have a trust issue parking their cash with the FED overnight and would rather get a lower yield with T-Bills instead.

Commercial banks are making 4.8% overnight at the FED and have had the privilege to make greater than 4.0% with 1-month to 1-year treasuries, but the regular person’s bank savings yield is only around 0.01% APR. The numbers just don’t add up.

Even Apple is offering a better annual rate of return with the new Apple Saving account which is yielding 4.15% APR.

Many people are buying treasuries directly from the TreasuryDirect which are yielding more than what people are getting at the banks. The 2 month is yielding 4.98% APR, 3 month is yielding 5.09% APR and 1-year is yielding 4.78% APR.

Here are the current bond rates from the 1 month to the 30 year.

People who have money in the banks are asking themselves, why should they park their capital in the banks that are only yielding 0.01% APR. Many people are not financially savvy on their finances and are losing money by keeping their cash in the banks that are giving them a rate of 0.01% APR which is way below the rate current rate of inflation, which is sitting at 6.45%.