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Savings/MMS offer higher beta passthroughs than interest checking and quicker passthroughs than CDs, and as a result, Wealth savings/MMS beta has been considerably higher than beta on overall Wealth deposit portfolios. Within two weeks of the September Fed rate cut, Wealth savings/MMS beta was 34%, and 48% within a month, and it was up to 50% two weeks after the October cut. Cumulatively for these most recent 50 bp Fed cuts, beta passthrough on Wealth savings/MMS was 41% by mid-November (see chart).
With the falling rate cycle expected to continue, the industry faces a tough balancing act. On the one hand, many treasurers are still under pressure to bring down deposit costs from historically high levels, and they need to meet a potential expectation of similar beta passthrough should the Fed make another cut this month. On the other, many firms across the industry view growth in Wealth deposits as a strategic priority and may be hesitant to adjust beta too aggressively.
Wealth Savings/MMS Portfolio Beta by 2025 Rate Cut
Source(s): Curinos Wealth Optimizer, Curinos Wealth Deposit Analyzer, FRED | Note(s): Simple averages displayed | Includes segment of FIs participating in Wealth Deposit Analyzer benchmark that send weekly data on Fridays; weekly FIs have lower through-the-cycle beta compared to full benchmark | Reference rate for beta calculation as of beginning of month in which Fed cut occurs
Tools like Curinos’ Wealth Analyzer and Wealth Optimizer can help balance these two divergent priorities. One provides a clear line of sight into competitor pricing that includes relationship-based exceptions. The other can help gauge the rate sensitivity of existing clients, many of whom may be indifferent to rate moves that many banks initially feel may be necessary to meet the market.
