Bank CD Rates October 6, 2009

Treasury rates were mostly unchanged by the close of Monday.  The six month Treasury rate was unchanged at 0.15%.  The one year Treasury shed one basis point or 1/100, pushing the yield from 0.37% on Friday to 0.36% on Monday.  The five year also lost one basis point moving the yield down to 2.21%.  The ten year held steady at 3.24%.  Though the rates were mostly firm, the ten year is hovering at its lowest level since May of 2009 and the one year Treasury rate is at the lowest point of the year.

The recent drops rates seems to be closely tied the recent revelation on Wall Street that perhaps the U.S. economy is not quite in recovery mode.  This is a position selectcdrates.com has held all year.  With unemployment numbers continuing to increase and no new signs of retail sales activity, even the Obama administration appears concerned over a continued bleak economic outlook. 

National CD rates have not been dramatically affected by the drop in Treasury yields.  This may simply be the result of the measurable drop in CD interest rates that has already occurred early in the year.  Regional bank CD rates however, are still scaling back promotional offers.  CD rates in states such as Georgia and Arizona continue to drop, albeit only modestly.  Though CD rates in most states surpass the national rates the spread continues to narrow as more regional bank reduce their promotional offers rather than increase them.

With inflation signals mixed, which will be one of the key catalysts for higher CD rates, the best CD rate investment strategy is to stay in short to mid term bank CDs or purchase CDs using the CD ladder strategy.  The CD ladder strategy entails purchasing bank CDs in varying maturities to achieve a higher yield on the overall portfolio without exposing the CD accounts to the interest rate risk associated with investing all of the funds in long term certificates.

This week the dollar is continuing to fall which helps our economy with exports, when the Yen moves from 125 yen to the dollar to 100 yen to the dollar this makes a U.S product cheaper since it is requires fewer yen to purchase, but makes foreign good more expensive and commodity prices higher.  With the weight of large Treasury auctions weighing on economists minds regarding higher interest rates as the supply of these securities may out weigh demand, the added pressure of a weaker dollar is likely to push up inflation creating two significant forces that will lead to higher interest rates and bank rates in the future.

Tags: bank, bank CD rates, bank CDs, bank rates, best CD rate, CD interest rates, CD ladder, CD rates, interest rates, rates, retail sales, treasury rates, unemployment

This entry was posted on Tuesday, October 6th, 2009 at 10:22 am and is filed under Money Rates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.