Retail CDs are simple savings products with early withdrawal penalties. Negotiable CDs of $100,000 and up are wholesale funding instruments that banks issue and investors trade, and their rates sit alongside commercial-paper in the money-market.
CD rates are a real-time gauge of bank funding pressure. When banks need deposits, they bid CD rates above Treasury bills, which squeezes their net interest margin.
Example: a 6-month CD pays 5.10% while a 6-month treasury-bill yields 5.22%. The bill is better on yield and on tax treatment in most US states, so the CD needs to pay more to attract wholesale cash.
Related: money-market, commercial-paper, treasury-bill, bank-reserves