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Bauer Financial Sees Short-Term CD Rates Stuck In Low Gear

Monday, July 29, 2013 - 10:57 AM
Bauer Financial predicts it will be another 18-24 months before short-term rates start to climb and discusses the rationale behind its forecast.     Bolding is mine. 
As if timed to support our theory, the Federal Reserve has temporarily stopped including secondary market CD rates in its weekly “Selected Interest Rates” (page 8 of JRN [note:  Jumbo Rate News] each week). These rates are an average of dealer bid rates for CDs that are actively traded in the secondary market and issued by “top-tier” banks. They are generally in denominations of $1 million or greater.

JRN has been listing these rates on page 8 for 20 years. Never, in all that time, has the percentage rate for these CDs not been reported… until now. If there are too few respondents to make the rate representative of the industry, the Federal Reserve does not report them.

That shows how little interest there is right now in the secondary market for Jumbo CDs. Those numbers have not been reported for the past three weeks.

Loan demand will have to be more  robust than it is now to get banks to raise interest rates on CDs… especially short-term CDs. Please, don’t shoot the messenger!

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