Why the Low Long-Term CD Rates

Bankrate.com now lists 12 banks with 1-year CDs with rates of 4.70% or higher. It only lists 13 banks with 5-year CDs with rates of 5.00% or higher. These days you don't get much of a premium for a term that's 4 years longer.

This WSJ article provides some insights into this interest rate environment. Last week the difference between 2-year and 10-year Treasury notes was only 0.08% which is down from 0.30% in September. Its historical average is 0.75%. This current flattening of the yield curve may be a sign of an economic downturn. The Fed's rate hikes have resulted in higher short-term interest rates. The worries in the bond market have kept the long-term rates low. This flat yield curve may then put additional pressure on the economy due to its effect on bank profits and homeowners' expenses.