Update July 20,2009 — Top Online CD Rates
It has been another terrible week for bonds. As the stock market has been rallying (although, I’m not really sure why?), Bond prices have decreased and yields risen (bond prices and yields have an inverse relationship). This happend in June as well. In June, some bank CD rates moved higher, but that hasn’t really materialized here in July.
The top online 1-year bank rates are in the 2.50% range. Competitive rates are in the 2.00% to 2.25% range. The yield curve is fairly flat on terms of 1-year to 3-year. There is usually a small bonus for going to a 2-years Certificate of Deposit. Most 2-year CD rates are about 0.25% above than the 1-year, and the 3-year is usually another 0.25% over that, around 2.75%. Good 5-year rates are close to 3.40 to 3.60% APY.
Typing the year and rate will produce some interesting rate data. This usually brings up a list of websites with current online yields. And if, for instance, you are trying to find the elusive 3%, you’ll probably find it within the highest twenty or so positions. Try a search by state, too. For example, you could type cd rates nj for rates in New Jersey
Over the next few months, the stock market and bond market will probably continue this frustrating give and take. Since the banks also know it is a back and forth, give and take, they probably won’t respond with higher online CD rates. I think it will take the Fed to increase Fed Funds to drastically change CD rates. That may not happen for another 9-months. Keep in mind that short-term interest rates will probably increase faster than longer-term rates, at some point leaving us with a flat or almost flat yield curve. If at some point the curve inverts again (as it did in 2006/2007), I would lengthen your terms on the CDs. Lower rates are usually just around the corner from an inverted curve. Yet, I think we are in for a continued time of lower interest rates. The economy isn’t improving. Everytime talking heads mention a greenshoot, indicators comes out that it really was a brownout.
Remember to check-out best bank CD Rates
Uncategorized | Admin July 24, 2009
