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Sixth Bank Failure of 2017: Fayette County Bank, Saint Elmo, IllinoisWhy the Low Long-Term CD Rates
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POSTED ON BY Ken Tumin
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.
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.