Our long stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserves conditions. We may approach that point in coming months, and we are closely monitoring a wide range of indicators to inform this decision. Some signs have begun to emerge that liquidity conditions are gradually tightening, including a general firming of repo rates, along with more noticeable but temporary pressures on selected dates.The committee's plans lay out a deliberat ...

Core Insights - Deposit account rates are declining, but competitive returns on certificates of deposit (CDs) can still be locked in, with the best CDs offering rates above 4% [1] Group 1: Current CD Rates - The best short-term CDs (six to 12 months) currently offer rates around 4% to 4.5% APY, with the highest rate at 4.25% APY for an 8-month CD from LendingClub as of October 14, 2025 [2] - CD rates today are significantly higher than traditional savings accounts, indicating a favorable environment for investors seeking fixed returns [2] Group 2: Historical Context - CD rates were relatively high in the early 2000s but began to decline due to economic slowdowns and Federal Reserve rate cuts, with average one-year CDs at around 1% APY by 2009 [3] - The trend of falling CD rates continued into the 2010s, with average rates for 6-month CDs dropping to about 0.1% APY by 2013 [4] - A slight recovery in CD rates occurred between 2015 and 2018 as the Fed gradually increased rates, but the COVID-19 pandemic led to emergency rate cuts, causing new record lows [5] Group 3: Recent Developments - Following the pandemic, inflation prompted the Fed to hike rates 11 times between March 2022 and July 2023, resulting in higher APYs on savings products, including CDs [6] - As of September 2024, the Fed began cutting the federal funds rate, leading to a decrease in CD rates from their peak, although they remain high by historical standards [7] Group 4: Understanding CD Rates - Traditionally, longer-term CDs offered higher interest rates, but the current highest average CD rate is for a 12-month term, indicating a flattening or inversion of the yield curve [8] - Factors to consider when choosing a CD include goals for locking away funds, type of financial institution, account terms, and the impact of inflation on returns [9]

Group 1: Treasury Yields Overview - The yield on the 10-year Treasury note ended at 4.05% on October 10, 2025, while the 2-year note was at 3.53% and the 30-year note at 4.63% [1] - A long-term view of the 10-year yield shows significant historical context, starting from 1965, prior to the 1973 oil embargo [2] - The inverted yield curve, where longer-term yields are lower than shorter-term yields, is a reliable leading indicator for recessions, with the 10-2 spread turning negative before recessions [2][3] Group 2: Recession Indicators - The average lead time to a recession based on the first negative spread date is approximately 48 weeks, while using the last positive spread date yields an average of 18.5 weeks [4] - The 10-3 month spread also indicates a lead time to recessions ranging from 34 to 69 weeks, with similar patterns observed as in the 10-2 spread [5] - The most recent negative spread for the 10-3 month occurred from October 25, 2022, to December 12, 2024, with fluctuations between positive and negative since February 26 [5][6] Group 3: Mortgage Rates and Federal Funds Rate - The Federal Funds Rate (FFR) influences borrowing costs for banks, which in turn affects mortgage rates; however, recent trends show mortgage rates declining despite the Fed holding rates steady [7] - The latest Freddie Mac survey indicates the 30-year fixed mortgage rate at 6.30% [7] Group 4: Market Behavior and Federal Reserve Influence - Federal Reserve policy has been a significant factor in market behavior, particularly regarding Treasury yields and their relationship with the S&P 500 [8]

Core Insights - CD rates are currently higher than historical averages, with some institutions offering rates of 4% APY and above, particularly online banks [2][5] - The highest CD rate as of October 9, 2025, is 4.25% APY offered by LendingClub for an 8-month CD [2] - The Federal Reserve has been cutting its target rate, which has led to a decline in CD rates since last year [2][4] CD Rate Trends - CD rates have been declining since the Federal Reserve began cutting rates in late 2024, with three cuts totaling one percentage point [3] - The first rate cut of 2025 was announced in September, with potential for additional cuts in the future [4] - Although the federal funds rate does not directly impact deposit interest rates, they are correlated, leading to a decrease in CD rates following Fed rate cuts [5] Opening a CD - The process for opening a CD account includes researching competitive rates, choosing an account that meets financial needs, preparing necessary documents, completing the application, and funding the account [6] - It is important to consider the CD's term length and minimum deposit requirements to avoid early withdrawal penalties [6]

Monetary Policy Stance - The Federal Reserve's minutes from its September 16th to 17th meeting revealed that almost all participants supported a 0.25% (quarter point) cut at the meeting [1] - A few participants believed there was merit in keeping the federal funds rate unchanged [2] - Most participants judged that it would likely be appropriate to ease policy further over the course of the year [5] - Financial conditions suggested monetary policy may not be particularly restrictive, suggesting a cautious path ahead [5] Economic Outlook & Concerns - Hawks noted progress towards the Fed's 2% inflation target had stalled, raising the risks of inflation expectations rising [3] - Officials indicated their outlooks for the labor market were uncertain and they viewed downside risks to employment as having increased [4] - Indicators cited included low hiring and firing rates, concentrated job gains in a small number of sectors, and increases in unemployment for groups traditionally sensitive to a weakening economy [4] - Economists are pointing to inflation figures and suggesting the worst of the tariff passed through into inflation and prices is yet to come [7] - Others are still concerned about the weakening of the labor market and the idea that that suggests a weakening of the economy ahead [7] Balance Sheet Considerations - Market participants are suggesting that reserves are at the borderline for whether or not there's enough available [10] - A 0.01% (one basis point) jump in the effective Fed funds rate recently was seen by some as a sign that this is coming [10] - Participants felt reserves continued to appear abundant, and no changes were suggested [5][11]

Group 1: Treasury Yields Overview - The yield on the 10-year Treasury note ended at 4.13% on October 3, 2025, while the 2-year note was at 3.58% and the 30-year note at 4.71% [1] - A long-term view of the 10-year yield shows significant historical context, starting from 1965, highlighting the impact of events like the 1973 oil embargo [2] - The inverted yield curve, where longer-term yields are lower than shorter-term yields, is a reliable leading indicator for recessions, with the 10-2 spread turning negative before recessions [2][3] Group 2: Recession Indicators - The average lead time to a recession based on the first negative spread date is approximately 48 weeks, while using the last positive spread date yields an average lead time of 18.5 weeks [4][6] - The 10-3 month spread also indicates recession lead times ranging from 34 to 69 weeks, with similar patterns observed in past recessions [5] Group 3: Mortgage Rates and Federal Funds Rate - The Federal Funds Rate influences borrowing costs for banks, which in turn affects mortgage rates; however, recent trends show mortgage rates declining despite the Fed holding rates steady [7] - The latest Freddie Mac survey reported the 30-year fixed mortgage rate at 6.34% [7] Group 4: Market Behavior and Federal Reserve Influence - Federal Reserve policy has been a significant factor in market behavior, particularly in relation to Treasury yields and the S&P 500 [8]

Mortgage Rates Overview - Current 30-year mortgage rate is 6.36%, down 11 basis points, while the 15-year fixed interest rate rose three basis points to 5.69% [1][14] - Refinance rates are generally higher than purchase rates, with the current 30-year refinance rate at 6.56% [2][14] Mortgage Rate Comparisons - 30-year fixed mortgage rates are currently at 6.36%, while 15-year fixed rates are at 5.69% [4] - For a $400,000 mortgage, the monthly payment for a 30-year term at 6.36% is approximately $1,993, resulting in $397,568 in interest over the term. In contrast, a 15-year mortgage at 5.69% has a monthly payment of about $3,309, with total interest of $195,585 [7] Adjustable vs. Fixed-Rate Mortgages - Fixed-rate mortgages lock in the interest rate from the start, while adjustable-rate mortgages (ARMs) have a fixed rate for an initial period before adjusting based on market conditions [9][10] - ARMs may start with lower rates than fixed-rate mortgages, but they carry the risk of increasing rates after the initial period [11] Federal Reserve Influence - The Federal Reserve has made several rate cuts in 2024, with expectations of more cuts before the end of the year, which may influence mortgage rates [12][13] - Economists do not anticipate significant drops in mortgage rates before the end of 2025, despite potential rate cuts from the Fed [15]

Core Insights - The 10-year Treasury yield ended at 4.20% on September 26, 2025, with the 2-year note at 3.63% and the 30-year note at 4.77% [1] - The inverted yield curve, where longer-term yields are lower than shorter-term yields, is a reliable leading indicator for recessions, typically turning negative before recessions [2][3] - The average lead time to a recession based on the first negative spread date is approximately 48 weeks, while using the last positive spread date yields an average lead time of 18.5 weeks [4][6] Treasury Yield Analysis - The 10-2 spread has shown a continuous negative trend from July 5, 2022, to August 26, 2024, with the last negative spread recorded on September 5, 2024 [3] - The 10-3 month spread also indicates a negative trend from October 25, 2022, to December 12, 2024, with fluctuations between positive and negative since February 26 [5] Mortgage Rate Impact - The Federal Funds Rate influences borrowing costs, and while typically a rising FFR leads to higher mortgage rates, recent trends show mortgage rates declining despite the Fed holding rates steady, with the latest 30-year fixed rate at 6.30% [7]

Market Trends - The effective federal funds rate experienced a slight increase on Monday, an uncommon occurrence [1] - This increase triggered selling activity in futures linked to the benchmark rate [1] - The rate hike potentially indicates a tightening of financial conditions in the near future [1]

Monetary Policy & Banking - The effective federal funds rate could edge higher [1] - This increase may indicate that excess bank reserves are dwindling faster than expected [1] - The effective federal funds rate has remained near the bottom of the Fed's target range for its benchmark over the past two years [1]