⦿ Executive Snapshot

• What: Several banks have increased their CD rates, offering higher yields for customers willing to lock up funds.
• Who: Banks under Morgan Stanley's coverage, particularly eight of the 35 analyzed.
• Why it matters: Rising CD rates reflect increased competition in the banking sector driven by loan demand and uncertain interest rate paths.

⦿ Key Developments

• Rates on CDs maturing in a year or less rose by 6 basis points to 3.71%.
• Rates on 13- to 36-month CDs gained 1 basis point to 2.62%.
• Eight banks under Morgan Stanley's coverage raised their CD yields in April.
• Stronger demand for loans is helping banks manage the costs associated with higher CD yields.
• Analysts expect CD rates to remain flat to slightly higher due to intensifying competition and loan growth.

⦿ Strategic Context

• The recent increase in CD rates is a response to rising competition among banks, as indicated by management teams during 1Q26 earnings calls.
• The Federal Reserve's decision to maintain interest rates has created a stable environment for banks to adjust their CD offerings, influencing investor behavior.

⦿ Strategic Implications

• Immediate market consequences include increased competition among banks to attract deposits through higher CD rates.
• Long-term implications may involve shifts in consumer behavior regarding saving strategies and the overall attractiveness of CDs compared to inflation.

⦿ Risks & Constraints

• Potential risks include regulatory changes that could impact interest rate policies or banking operations.
• Competition from alternative investment vehicles may limit the effectiveness of CD rate increases in attracting deposits.

⦿ Watchlist / Forward Signals

• Upcoming milestones include the monitoring of Federal Reserve announcements regarding interest rates and their effects on bank yields.
• Future developments will signal the success of increased CD rates, particularly through loan demand trends and inflation rates.