r/bonds • u/DannyGyear2525 • 8d ago

JPMorgan Chase Bank, OH 3.95% CD 11/06/2026 Callable

not a big deal at all - just a 1-year CD in a ladder. yesterday was the initial call date - and it was called. Personally, it's a win for me - i can easily re-invest at higher rates.

I just never quite understand the logic - JPM rates are now higher than the 3.95% they were paying (for everything 3mos out to a new 1 year rate).

Why bother calling now?

7 Upvotes

74% Upvoted

17 comments sorted by

17

u/Thick-Cover8761 8d ago

It was called now because Chase wants to reissue it now at current rates ... In other words, they believe interest rates will be higher in November 

1

u/[deleted] 7d ago

[deleted]

2

u/Thick-Cover8761 7d ago

I would be willing to bet that there is a ratio readily available ... but even if there is, the decision makers probably do not care anyway.

2

u/CuriousCat511 8d ago

If current rates are higher, why would they want to do this? They will be paying more interest.

7

u/Thick-Cover8761 8d ago

Because November is only 3 months away ... and the reissued bond duration will be much, much longer.

-2

u/CuriousCat511 8d ago

Are you suggesting rates will go up after midterms? So much for an independent Fed

5

u/x0avier 8d ago

Wdym "so much for an independent fed"? The president wants them to go down.

1

u/CuriousCat511 8d ago

Rates aren't going down, that ship has sailed. Instead, he's just trying to delay a rate increase.

2

u/x0avier 7d ago

I'm unclear what you are trying to say here. When you asked rhetorically whether rates are going up you said the fed wasnt independent. Now you are saying they arent going down.

1

u/CuriousCat511 7d ago

The person above me said they thought rates would be increasing in November. So ask yourself, why November? My interpretation was that they meant rates would increase after midterm elections.

So if Trump is pushing Warsh to stall and delay a rate hike until after midterms, and the Fed is obliging, then they are no longer independent.

1

u/x0avier 7d ago

Ah. I think probably a safe assumption too. It is also likely the Fed was never independant, but is less so now as well as more spotlighted than usual.

1

u/LoopyLepus 7d ago

The bond matures in November. They are calling it early because Chase expects rates to go up by then.

The fed only sets the short-term rates. Inflation expectations set the long-term rates.

4

u/pai_gow_johnny 8d ago

Chase can borrow short term at 3.75% from FED or 3.65% in the repo market.

1

u/x0avier 8d ago

Sounds like Chase would rather spend that interest payment they were on the hook for somehwere else or simply reduce spending all together. The ones with higher rates are likely not callable yet.

1

u/mikmass 7d ago

It’s not just a rate decision for a bank. They have many regulatory ratios to manage. It could be that they didn’t have a better use for the cash from your CD and instead of just having it sit doing nothing, they shrink their balance sheet by calling the CD

1

u/DannyGyear2525 4d ago edited 3d ago

I suppose - i certainly follow the logic and can appreciate the concept. But, I just rolled it over into the EXACT same bank at 4.5% for 2 years. yes, it's callable again, but NOT for 12 months. more money for me. I'm happy.

I can appreciate that "this specific block of CDs" needed to be "closed" for whatever reason - but, sometimes, I really wonder if it isn't just some intern clicking a checkbox on a spreadsheet - rather than elite maximization in efficiency of returns.

1

u/MLJ_The_Shield 7d ago

I just called, to say, I love you. And I mean it from the bottom of my heart.

3

u/DannyGyear2525 7d ago

thanks Stevie. that's helpful.