CBA offers 2.25% term deposit

CBA is now offering a 2.25% term deposit for 18 months

https://www.commbank.com.au/banking/term-deposits.html

This is more than their prediction for RBA overnight rates (1.6% I believe) – not sure why they would lie since surely they would rather fool people into fixing loans at high rates

Maybe the banks have been told that there won’t be a TFF this time round, so they are scrambling to secure long term funding?

Really hard to understand how australia gets out of this without a massive recession.

Seems like a controlled demolition to me – part of the great reset I guess

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Gouda

The CBA CEO was on the radio last week promising a rise in the their saving accounts by 0.25% – from what I gather there has only been a rise of 0.15-0.17 so far.

Probably some first mover advantage here as other banks catch up, but 2.25 for a TD means larger increases will probably come for those who wait.

Peachy

You’re right – indeed better offers are already out there.

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Peachy

Yes they are covered.

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Ramjet

Specialise in business banking. They are listed on the ASX. Ex NAB executive started Judo bank. Given the rates on business loans, they can probably afford to pay competitive interest rates.

Peachy

Ah, didn’t know that they were trying to do business banking.

fancy that, lending to business!!

Reus's Large MEMBER

That is so un-EZFKA, they need to be sent to the re-education camp

Peachy

it Could be 4D chess

  • publicly “predicting” 1.6% rates (actually “telling” the government where they want rates to pause)
  • at the same time taking more expensive term deposits (actually threatening the government with a claim of what the funding costs will be if they don’t make good with more cheap/free money)

at the same time, of course the 2-year (remaining) government bond paying 2.75% is trading at about face value today, which means CBA 2-year paper would need to pay at least 2.75%.

Which is to say, 2.25% is still cheap funding.

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Peachy

There ar e multiple ways to skin a cat.

Skim some on cheap term deposit funding, grab some on panicked rate-fixers, shake down the government for some kind of free kick.

and always keep things on motion and flux, so it’s not perfectly obvious what you’re doing 😉

I mean, there’s a behavioural aspect here too and learning/feedback. They jack the rate to 2.25% & see what happens, gather information on demand for that (eg they might find that they get fuck all deposits at 2.25 for 18 mo… maybe they need to offer that for 12. Or maybe 2.5 for 18). Same with fixed rate borrowings… then they adjust & try to optimise….

Last edited 1 month ago by Peachy
JimsCentralBanking

Mate it’s 1D chess and the D is attached to their heads

Jimmy Saville

“Judo Bank”? are they run by israelis?

Peachy

I think it might be Putin’s pocket bank

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Joachim Peiper

I’d like to start my own bank and call it Wank Bank or Cum Bank.
Give new meaning to deposits and withdrawals.

Ramjet

The rates for other terms are much lower, so probably means that CBA is short on liabilities maturing in 18 months to match some assets of a similar duration and are prepared to pay a premium for it.

canuckdownunder

AMP now paying 3.25/3.30% on 18 month TD, ING just went from 0.22% to 2% on a one year TD. Just the beginning.

Inflation numbers coming in hotter than expected in UK, Canada, USA… meanwhile our business journos like Peter Martin suggest inflation is already back to zero. Must have a degree from Clown College and a massive negatively geared portfolio. MB boffins probably calling for a rate cut in June 😂

Rates are going up, up, up, forget 18 months from now, we’re in the endgame. The masses are going to get boiled alive, too much debt holding the lid down and unable to get out of the pot.

Agent 47

MB are begging for rates not to rise so we get killed by inflation instead. I mean it writes itself.

Peachy

MB just don’t understand that inflation is the devil.

the fucking devil.

Aussie Soy Boy

The only care about their MB fund. They’re cunts.

Ramjet

Seems they only have their core readership and a few antagonists left on the blog.

Aussie Soy Boy

I think 6-8% inflation is the new 2-3% inflation target.

Do you really expect any human to do what is unpopular and requires discipline.

Ramjet

Yes, inflation is the devil for the working and some of the middle class. These are the majority. But there are some who don’t do too badly out of inflation. I assume if you have a business that ticket clips you don’t do as bad. EmBee spent years telling us ticket clipping bad, but look at what they have ended up as.

Peachy

Rates are going up, up, up, forget 18 months from now, we’re in the endgame. The masses are going to get boiled alive, too much debt holding the lid down and unable to get out of the pot.

im not yet convinced that rates will run up hard & persist. The same dynamics that saw debt hikes quickly reversed in years past seem to still be around & likely to come into play again….

what’s changed?

Last edited 1 month ago by Peachy
Reus's Large MEMBER

Agreed, unless they find a way to “save” the housing complex, interest rates will never be allowed to get to and stay at a level that threatens the existence of the bubble

Peachy

I’m seeing MB has very high conviction that rates WONT rise far or for long, and house prices WONT crash

That has me seriously worried as they usually get everything completely wrong and have always been an almost perfect contrarian indicator

I don’t know what numbers MB puts on this, but I reckon that rba will try to get rates at least to 200bps higher, to take back the covid largesse.

becuase, let’s face it, the “pandemic” that prompted them to crater rates to 0 was actually a walk in the park. So they’ll want to go back to pre Covid levels. That would imply blowing off the 20% or so worth of froth that Covid added to housing markets.

What they do from there could well be a gradual set of BAU “lower teh rates” events every couple of quarters.

Or maybe they’ll be forced to follow other central banks up a bit higher (if the other central banks go up).

Aussie Soy Boy

Sydney and Melbourne might see big falls, but I don’t think prices elsewhere are out of whack with reality.

Buying instead of renting is going to make a lot of sense in an unstable world for the average punter out there.

Real interest rates must be at least -5% right now.

Australia has record unemployment rates.

Most people in great financial shape relative to anywhere else in the western world.

canuckdownunder

The big difference now is that inflation has reared its ugly head and this has CBs scared shitless.

The whole idea of US (and therefore Western) dollar hegemony relies on the world having faith in these currencies, when real interest rates are -10% it becomes a big problem.

Plus the elites want rates to rise now for maximal extraction of wealth from the plebes. Surely they weren’t goosing asset values for the benefit of Johnny 6 Pack.
They need a crash to pick these assets back up for pennies on the dollar.

Aussie Soy Boy

Before the US egged on Ukraine and China going for COVID zero against Omicron I thought supply chain problems would start to resolve and 4 rate hikes would get inflation to zero, but as always MB behind the curve.

Then we got the new homosexual disease Monkeypox, this child hepatitis on the rise, US seem intent on prolonging war in Europe a long time yet, not to mention entrenched labour shortages across the western world for the forseeable future, massive energy, food inflation in the west which won’t go away as sanctions will last long after any ceasefire (what you get for letting the yanks use you I suppose).

China sitting really pretty right now (MB wrong on that once again), rouble stronger than pre invasion.

Ramjet

We will get stagflation in the west. Energy price spikes cause recessions and prolonged energy prices cause stagflation.

The two options that the West are staring down are raise rates to reduce inflation or look through inflation. EmBee is in the latter camp as they feel it is transitory which it isn’t.

Aussie Soy Boy

It is transitory if supply chains in Asia go back to pre pandemic levels, the US war in Europe ends, sanctions against Russia are dropped. But none of those things are happening so MB will be wrong, wrong, wrong.

Gouda

This is great news. 18 months is too long for my liking, I think the 3-6 month term Ds will be the sweet spot to take advantage of rising rates.

I wonder what you girls and boys think of the miraculous employment %?
Somehow I do not see the business momentum picking up to create new jobs.

I reckon it is due to lower participation numbers.
Jabbadabba don’ts are unemployable and are likely not to seek work anyway. Statistically they do not exist.
I imagine a graph of orkforce nominal numbers vs. employment rates could (dis)prove it.

Gouda

I bet his No BS party won’t even poll.

Aussie Soy Boy

Imagine thinking your life will materially change with a Labor victory. Fuck me.