Charting the course of bank rates in 2016 has been a fool’s errand.  Forecasting interest rates has always been a difficult task and this can be understandable since there are an awful lot of factors that determine the future course of interest rates.  Just looking back over the past six months, we can see that even the Fed alone cannot force a change in the course of interest rates over short periods of time.  Since the Fed pushed rates higher in December with a nudge to the fed funds rate and the announcement of future rate increase in 2016, interest rates have moved to their own beat and sauntered on lower.

The downward draft in interest rates that has taken place through most of 2016 may not seem all that unreasonable after digesting all the negative sentiment about the U.S economy that has been bandied about in the press.  The drift lower is however, somewhat shocking considering one of the biggest yardsticks used to measure the health of the economy, employment, has continued to put up solid numbers.  Monthly employment numbers have seen some slight dips slightly recently but the numbers have remained robust, on average, with job gains averaging 228,000 per month over the past 3 months.

The job growth figures tell us the U.S. economy is still growing but, jobs alone don’t tell the whole story and are not powerful enough to steer interest rates.  Global trade has impacted every aspect of the U.S economy including, interest rates.  Interest rates have been dragged down over the past four months from a stronger dollar, weak energy prices and commodity prices, and the slowdown in emerging market economies.

Emerging markets have experienced a double whammy with low commodity prices killing the exporting nations and the slowdown in China hurting the low cost good producers.  The U.S does very little export trade with China but China buys a lot of unfinished goods from a number of emerging markets.  As China has slowed down, so have the economic standing of the developing nations that export to China.

Along with the continued strength in the U.S. jobs market, new data shows commodity prices finally rebounding.  Higher commodity prices will help some emerging markets which will in turn, continue to drive raw material prices higher.  India is growing and Britain is moving ahead, unfortunately the rest of the Eurozone is still struggling along but not falling into recession.  And that is the key for interest rates going forward.  Recession is not on the horizon.  Not even close.

With that in mind, interest rates are destined to be higher going into the spring and summer months.  Good news for savers and investors looking for higher yields with certificates of deposit and savings accounts.  Not such good news for new home loan borrowers and car loan shoppers.

Bank rates market recap for March 14, 2016:

CD interest rates:
Composite CD interest rate index 1.248 percent
3 month CD rates 0.532 percent
6 month CD rates 0.923 percent
1 year CD rates 1.258 percent
2 year CD rates 1.455 percent
5 year CD rates 2.072 percent

Money market and savings account rates:
Bank money market rates and savings account rates 1.040 percent

Mortgage rates:
30 year mortgage rates 3.842 percent
15 year mortgage rates 3.224 percent
20 year mortgage rates 3.588 percent
30 year jumbo mortgage rates 3.678 percent
30 year FHA mortgage rates 3.778 percent

Credit card rates:
Credit card rates for new credit card offers 13.89 percent

US Treasury rates:
Six month Treasury rate 0.51 percent
One year Treasury rate 0.70 percent
Two year Treasury rate 0.97 percent
Five year Treasury rate 1.49 percent
Ten year Treasury rate 1.98 percent

All bank savings rates and lending rates are based on surveys conducted by at the close of March 11, 2016 with all of the interest rates obtained directly from the banks within the survey.  Treasury rates are obtained directly from the Department of the Treasury.

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