What accounts for the difference in yield to maturity (YTM) between brokered CDs and US Treasuries?

External question — Personal Finance Stack Exchange Author: Franck Dernoncourt Original post: https://money.stackexchange.com/questions/155474 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Looking at the Charles Schwab table below dated 2023-02-24 on the yield to maturity (YTM) for different brokered CDs and bonds, I see that for when the maturity is 1 year or higher, brokered CDs have a higher YTM than US Treasuries, whereas when the maturity is strictly less than 1 year, brokered CDs have a lower YTM than US Treasuries. What accounts for the YTM difference between brokered CDs and US Treasuries?

External answer — Personal Finance Stack Exchange Author: AKdemy Original post: https://money.stackexchange.com/a/155502 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. A certificate of deposit (CD) is a savings product that earns interest on a lump sum for a fixed period of time. The money must remain untouched for the entirety of their term which is a reason that they usually pay higher interest rates than savings accounts as an incentive for lost liquidity. Private investors will be reluctant to accept lower interest rates if their money is tied longer. Also, CDs (and other deposit) rates often do not increase as soon as the FED hikes rates and net interest margins increase. Only competition forces the rate up over time. Either way, these rates are closely tied to the FED funds rate as a benchmark. Below is a Figure from FRED . Bonds are heavily traded by professional investors. It is not just the current short term interest environment that matters but expectation about future variables (output, inflation, interest rates, swap rates ...). Therefore, bond rates (especially in mid to long term) can deviate substantially (in both directions) from the current Fed Funds Rate: