Yesterday’s interest rate movements were somewhat curious based on the data that was delivered.  The ISM or Institute for Supply Management manufacturing index showed growth for the first time in 19 months.  President Obama chimed in,” It is a sign that we’re on the path to economic recovery. “  However, the bond market apparently is not convinced and bond prices began moving up pushing interest rates lower. 

It is interesting that the president would make such a positive statement three days before the release of the employment report.  No one in the administration should be aware of the contents of the report and the report is far from completed, however, it just seems odd that the president would go out on limb should the report be terribly negative.

Of course, our position is that the economy is possibly on a path of finding the bottom but is far form a path of growth.  Expectations for the employment report are for job losses of 225,000.  Somehow in today’s bleak financial picture that is a positive figure to economists.  The path to economic recovery is apparently defined as fewer job losses.  To conclude that job losses in the hundreds of thousands is a path to recovery sounds like political spin.  Eventually, the U.S. economy will stop laying off thousands of workers but that should be interpreted as the bottom.  When job losses hit zero, that is the bottom.  Zero job losses is the bottom, not 200,000.  That is not new economics or finance. 

I am not throwing the new administration under the boss like the ultra right wing loonies; it is simply possible to view these statistics as mere sideways movements, far from growth.  Once a bottom is reached it is not a for gone conclusion that growth comes next.  It is entirely probable that we remain as part of the living dead with either no growth or very limited growth for some time. 

Tuesday’s bond market closed with the long rates moving lower while short term rates remained mostly unaffected.  The six month Treasury rate fell one basis point to 0.23%.  The one year Treasury held constant at 0.43%.  The two year moved lower by five basis points to 0.92% from Tuesday’s close of 0.97%.  The five year was down six basis points, closing at 2.33%.  While the ten year Treasury dropped by two basis points to rest at 3.38%.
Now is the time to check the state CD rate tables for the best CD interest rates.  Many state specific banks and regional banks are far outpacing the best national bank rates and online bank rates at this time.  There are a whole host of banks in Florida offering six month Florida CD rates at or above 2.00%.  Short term California CD rates are also hovering at or above 2.00%.  In contrast, the best online 6 month CD rate is now only 1.80%.

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