Treasury Yields Remain Near 5%

The bond market remained under pressure this week as investors adjusted to the Federal Reserve’s decision to raise interest rates. The Fed increased its benchmark rate by 25 basis points, bringing the target range to 3.75%–4.00%. The decision reflected continued concerns about inflation and the need to move inflation closer to the Fed’s 2% goal.

The 10-year Treasury yield ended at 4.94%, while the 30-year yield ended at 5.29%. When Treasury yields rise, borrowing costs can remain elevated for mortgages, business loans, auto loans, credit cards, and other forms of credit.

Takeaway: The Fed raised short-term rates, while longer-term Treasury yields remained high, keeping borrowing costs elevated.

Title: Banks and Credit Unions

Banks and credit unions are financial institutions that accept deposits, which they use to make loans and investments. Depositors keep their money in these institutions for a variety of reasons, including safety, convenience, and the ability to earn interest. Financial institutions offer a wide range of services to help people manage their money. These services may include checking accounts, savings accounts, credit cards, auto loans, personal loans, mortgages, and other financial products.

The services offered by banks and credit unions are similar, but the two types of institutions have some important differences. Most banks are organized as for-profit corporations. For-profit corporations are owned by shareholders. Banks are regulated by federal and state authorities, depending on the type of bank and its charter. Deposits at FDIC-insured banks are insured by the Federal Deposit Insurance Corporation (FDIC).

Credit unions are member-owned, not-for-profit financial institutions. To open an account, a person generally must meet the credit union’s membership requirements. Credit unions are regulated by federal or state authorities, depending on their charter. Deposits at federally insured credit unions are insured by the National Credit Union Administration (NCUA).

Federal Deposit Insurance Corporation (FDIC)

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government. It protects depositors by providing deposit insurance at FDIC-insured banks. The FDIC was established in 1933 following the banking problems of the Great Depression. Since the FDIC began operations, no depositor has lost money on a deposit within the standard FDIC insurance limits because of a bank failure.

FDIC deposit insurance protects depositors if an FDIC-insured bank fails. When a bank fails, the FDIC generally works to protect insured depositors and may arrange for another bank to assume the failed bank’s deposits and certain other assets. The FDIC insures eligible deposit accounts at participating banks, including checking accounts, savings accounts, and certificates of deposit (CDs).

The FDIC generally provides insurance of up to $250,000 per depositor, per FDIC-insured bank, for each ownership category. Ownership categories can include single accounts, joint accounts, and certain retirement accounts. FDIC deposit insurance is backed by the full faith and credit of the United States government.

National Credit Union Administration (NCUA)

The National Credit Union Administration (NCUA) is the federal agency that regulates federal credit unions and administers the National Credit Union Share Insurance Fund (NCUSIF). The NCUSIF provides federal insurance for deposits, known as shares, at federally insured credit unions.

NCUA share insurance generally provides up to $250,000 of coverage per member-owner, per federally insured credit union, for each ownership category, similar to the standard FDIC insurance limit for bank deposits. The insurance is backed by the full faith and credit of the United States government.

Common Deposit Accounts

Savings Accounts

A savings account is a deposit account used to set money aside for future needs. Savings accounts generally pay interest on the money deposited into the account. They can be useful for keeping money available while earning some interest.

Checking Accounts

A checking account is a transaction account that allows people to deposit money and access their funds regularly. Checking accounts are commonly used for everyday expenses, such as paying bills, making purchases, and withdrawing cash.

Certificates of Deposit (CDs)

A certificate of deposit (CD) is a deposit account in which money is generally kept for a specific period of time, known as the term. CDs generally pay a specified interest rate for the agreed-upon term. In many cases, a CD may pay a higher interest rate than a traditional savings account. However, withdrawing money before the maturity date may result in an early-withdrawal penalty.

Understanding the differences between banks and credit unions, as well as the types of deposit accounts they offer, can help people make informed decisions about where to keep their money and how to manage their savings.

Stocks Recover Friday After a Volatile Week

Wall Street experienced significant movement this week as investors reacted to the Federal Reserve’s rate increase, oil prices, and Treasury yields. Technology stocks helped the Nasdaq outperform the Dow during the week, while the broader market remained sensitive to changes in interest-rate expectations.

Friday brought some relief as the S&P 500 and Nasdaq moved higher. Oil prices also eased after reaching nearly $110 per barrel earlier in the week. Brent ultimately finished at $103.87, down 0.7% for the week.

Takeaway: Stocks remained resilient, but higher interest rates and oil prices are creating uncertainty for businesses and investors.