The Fed raised rates. Maximize your savings with these CDs, savings accounts and more

The Federal Reserve raised the federal funds target range by 25bps to 3.75%-4.00% at its Sept. 16 meeting, its first increase since July 2023, when rates reached 5.25%-5.50%. The hike is expected to lift deposit rates and eventually CD yields, while newly issued Treasury yields may also rise; high-yield savings accounts cited in the article offer up to 4.21% APY and selected CDs up to 4.35%. With persistent inflation and economists anticipating at least one additional hike over the next 12 months, the article advises consumers to preserve liquidity and avoid prematurely locking funds into longer-duration CDs.

Analysis

The investable read-through is not the 25bp move itself but the re-pricing of the terminal-rate distribution. A renewed tightening phase raises the value of sticky, transaction-oriented deposits while penalizing institutions reliant on rate-sensitive brokerage cash and promotional deposits. SCHW remains more exposed than diversified banks to cash-sorting: higher client cash yields and money-market migration can keep funding costs elevated even if asset yields reprice upward, delaying the operating-margin recovery embedded in consensus estimates.

GS has a cleaner relative setup. Its institutional funding base and markets franchise benefit from higher rate volatility, wider hedging demand, and financing activity, while its legacy consumer-deposit sensitivity is now less central to earnings. The second-order risk is a further rise in real yields: that supports trading revenue near term but can slow debt issuance, sponsor activity, and M&A conversion over the next 1-3 quarters.

Consensus may be too focused on whether another hike occurs rather than on deposit-beta persistence. If retail banks compete aggressively for insured deposits, the sector can experience margin pressure despite higher headline rates; this is particularly unfavorable for regional-bank proxies (KRE) and for SCHW if sweep balances resume declining. Conversely, a rapid flattening or inversion of the front end would remove the incremental NII upside from the hike while leaving expensive deposit campaigns in place.

Over days, rate-sensitive financials may initially trade with the hawkish impulse; the more useful 1-3 month signal is monthly brokerage cash movement, money-fund assets, and bank deposit-cost disclosures. Over 6-18 months, sustained restrictive policy favors scaled capital-markets platforms over deposit-funded lenders, unless credit losses rise enough to overwhelm trading and financing gains.

Key Decisions for Investors

• Initiate a 3-6 month long GS / short SCHW pair, sized beta-neutral. Target 10-15% relative upside if rate volatility and deposit competition persist; exit if SCHW reports sequential growth in sweep deposits plus deposit costs stabilizing, or if GS's markets/IB fee run-rate weakens materially.
• Maintain an underweight in KRE versus XLF for the next 1-3 months. The trade expresses deposit-beta and commercial-credit risk without assuming a large directional move in Treasury yields; cover if 2-year yields fall more than 50bp from post-meeting levels or regional-bank deposit costs decline sequentially.
• Use SCHW earnings and monthly client-asset data as a watch trigger rather than adding outright short exposure immediately. A renewed sequential decline in bank sweep balances or a further increase in paid cash yields would validate downside to consensus margin expectations; evidence of net new assets remaining in sweep cash would falsify the thesis.
• For GS, favor buying 6-month call spreads rather than unhedged equity after any post-meeting pullback. The upside catalyst is elevated rates volatility translating into FICC and financing revenue; the principal risk is a sharp risk-off move that closes capital-markets windows and drives credit provisions higher.