Trumps Tariffs
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Banks can pay interest on accounts from the interest they earn off of treasuries. However, that is not the norm they will offer things like a CD paying a higher rate than a typical savings account as the national average for a savings account is .38% or .42% percent depending what source you use. Anyway it is miniscule to say the least.
So anyway CD's they will use to tie up your money for a set period of time which allows them to manage their liquidity better. They will offer around 4% then turn around and loan that money out from 6-15% depending on the type of loan and the institution be it a bank or a credit union.
They will as well loan out deposits again for a much higher rate than the .4% they may pay you. The interest that banks pay customers is normally paid out of credit card interest or loan interest.
They will buy some treasuries at auction. For them to become part of their own assets. As well as to have on hand if they are short liquidity to sell them on the repo market.
While banks do have to buy unsold treasuries they will keep some on hand to meet their depository requirement's set by the Fed. As well as keep some to sell their customers for cash management or asset management accounts. Then they of course collect fees for these types of accounts.
They also will sell the treasuries back when the Treasury Department post it's buybacks. These can be found on the Treasury Department's website.
https://www.treasurydirect.gov/auctions/announcements-data-results/buy-backs/
They have 3 buybacks announced for the upcoming dates of July 22 and 30th. As well as Aug 5th. The announcement will list the amount to be bought back, security type, and type of buyback. On the day of the buyback they will list the CUSIP numbers of the treasuries. When it list's cash management that is Treasury buying them back for it's own debt management process. When it list's liquidity support that is treasury buying back, off the run treasuries from institutions for the institution to have liquidity.
Off the run treasuries are old treasury issues, on the run treasury treasuries are the newest offerings. What happens with off the run treasuries is they will end up being sold on the secondary market. The secondary market is it's own animal as formulas have to be worked for coupons already paid out and coupons yet to be paid. What is the coupon rate on the old treasury compared to on the run treasuries. So it tends to be more of a buyer's market than a sellers as oft the off the run treasury will have to be sold for a discount giving the buyer a higher yield.
So Treasury will do buybacks for liquidity which allows banks to sell them back and then have cash on hand to make new loans.
So anyway CD's they will use to tie up your money for a set period of time which allows them to manage their liquidity better. They will offer around 4% then turn around and loan that money out from 6-15% depending on the type of loan and the institution be it a bank or a credit union.
They will as well loan out deposits again for a much higher rate than the .4% they may pay you. The interest that banks pay customers is normally paid out of credit card interest or loan interest.
They will buy some treasuries at auction. For them to become part of their own assets. As well as to have on hand if they are short liquidity to sell them on the repo market.
While banks do have to buy unsold treasuries they will keep some on hand to meet their depository requirement's set by the Fed. As well as keep some to sell their customers for cash management or asset management accounts. Then they of course collect fees for these types of accounts.
They also will sell the treasuries back when the Treasury Department post it's buybacks. These can be found on the Treasury Department's website.
https://www.treasurydirect.gov/auctions/announcements-data-results/buy-backs/
They have 3 buybacks announced for the upcoming dates of July 22 and 30th. As well as Aug 5th. The announcement will list the amount to be bought back, security type, and type of buyback. On the day of the buyback they will list the CUSIP numbers of the treasuries. When it list's cash management that is Treasury buying them back for it's own debt management process. When it list's liquidity support that is treasury buying back, off the run treasuries from institutions for the institution to have liquidity.
Off the run treasuries are old treasury issues, on the run treasury treasuries are the newest offerings. What happens with off the run treasuries is they will end up being sold on the secondary market. The secondary market is it's own animal as formulas have to be worked for coupons already paid out and coupons yet to be paid. What is the coupon rate on the old treasury compared to on the run treasuries. So it tends to be more of a buyer's market than a sellers as oft the off the run treasury will have to be sold for a discount giving the buyer a higher yield.
So Treasury will do buybacks for liquidity which allows banks to sell them back and then have cash on hand to make new loans.
Oh goodness. I agree for example folks did not truly recognize Trudeau for the idiot king he was, so hell bent on his authority and it's expansion that he shut off bank accounts to those that dared to practice freedom of speech. So what did these blind leading the blind do they went out and actually elected a carny. Carney the carny......lol
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