Federal Reserve, the Economy and CD Rate Forecast - August 13, 2019

POSTED ON BY

After the July Fed meeting, Fed Chair Jerome Powell told reporters that the Fed’s decision to cut rates should be interpreted as a “mid-cycle adjustment” and not a start of a long series of cuts that occurs when there’s a recession or a very severe downturn. Since that day, signs have started to point to a long series of cuts rather than a mid-cycle adjustment. Recession fears appear to be growing as trade tensions increase. Wall Street economists have been coming out with new forecasts for slower growth and rising risks that could lead the Fed to make additional rate cuts.

The market’s fear of a recession may be overblown. As economist Tim Duy stated in his Fed Watch blog post, “we generally lack the data to worry about a recession [...] only industrial production is showing weakness but still less than experienced in the non-recessionary 2015-16 downturn.” If we only see a short-term slowdown in the economy, Fed Chair Powell may have been correct to characterize the Fed action as the start of a “mid-cycle adjustment.” It will take awhile to know which path it will be. If we reach December with the federal funds rate nearing 1% with more talk of rate cuts to come, we’ll know that the Fed’s action was more than just a mid-cycle adjustment.

Falling trade tensions could help reduce the risk of a recession, and a step in that direction occurred today with the U.S. announcement that it would delay some of the tariffs that were scheduled to take effect on September 1st.

An important economic news story occurred today with the Labor Department’s release of the Consumer Price Index for July. The report showed inflation ran slightly above expectations in July with CPI and core CPI rising 0.3% (the consensus was 0.2% for both). This news is unlikely to have much impact on Fed policy. The rising inflation numbers are not high enough to dampen the march toward lower rates.

Another issue that is worrying the markets and economists is the yield curve. Parts of the yield curve have been inverted for awhile, but there is one part that is approaching inversion that has people worried. That part is the 10-2 spread (the difference between the yields of the 10-year and 2-year Treasury notes). A negative 10-2 spread has a history of preceding recessions. Even with months of the 1-month yield remaining above the 10-year yield, the 10-2 spread has remained positive. However, that may not last much longer. At the end of the day Monday, the 10-year yield (1.65%) was only 7 bps above the 2-year yield (1.58%). That spread narrowed quite a bit from last week when it was 16 bps.

The shrinking 10-2 spread is the result of big yield declines in the long-dated maturities. The yield of the 10-year note fell 10 bps from last week while the 2-year yield fell by only 1 bp. The largest drop in yield occurred on the longest-dated maturity, the 30-year bond. Its yield fell 16 bps to 2.14%. The 30-year yield is now only 5 bps above the 1-month yield. With some favorable economic news today, some Treasury yield gains should be expected.

The Fed Funds futures markets (via the CME FedWatch Tool) continue to price in a 100% chance of at least a 25 bp rate cut at the September meeting. The good news is that the odds of larger and additional rate cuts have gone down. The odds of at least a 50 bp cut in September declined from 16.5% last week to 9.6% today. By the end of the year, the odds that the federal funds rate will be at least 50 bps lower than today are now 86.3%, down from 89.4% last week.

The following numbers are based on Daily Treasury Yield Curve Rates and the CME Group FedWatch.

Treasury Yields (Close of 8/12/19):

  • 1-month: 2.09% up from 2.07% last week (1.92% a year ago)
  • 6-month: 1.94% down from 1.99% last week (2.23% a year ago)
  • 1-year: 1.75% down from 1.78% last week (2.42% a year ago)
  • 2--year: 1.58% down from 1.59% last week (2.61% a year ago)
  • 5--year: 1.49% down from 1.55% last week (2.75% a year ago)
  • 10-year: 1.65% down from 1.75% last week (2.87% a year ago)
  • 30-year: 2.14% down from 2.30% last week (3.03% a year ago)

Fed funds futures' probabilities of future rate CUTS by:

  • Sep 2019 - down by at least 25 bps: 100% same as last week
  • Sep 2019 - down by at least 50 bps: 9.6% down from 16.5% last week
  • Dec 2019 - down by at least 50 bps: 86.3% down from 89.4% last week
  • Dec 2019 - down by at least 75 bps: 39.7% down from 46.7% last week
  • March 2020 - down by at least 100 bps: 27.6% down from 34.5% last week

CD Interest Rate Forecasts

CD rate cuts have continued in the last week. Most of the cuts came after the July Fed meeting as the new month started.

In the last week, we have seen several more banks and credit unions cut their CD rates, and we have seen several that have added on to previous rate cuts. Recent examples of institutions that have cut rates include:

  • Popular Direct (5yr fell 15 bps to 2.55% APY, 1yr fell 5 bps to 2.25% APY)
  • Vio Bank (5yr fell 15 bps to 2.00% APY, 1yr fell 15 bps to 1.75% APY)
  • American Express National Bank (5yr fell 15 bps to 2.55% APY, 18mo fell 35 bps to 2.15% APY)
  • Live Oak Bank (4yr fell 10 bps to 2.60% APY, 2yr fell 10 bps to 2.60% APY)
  • First National Bank of America (5yr fell 5 bps to 2.85% APY, 1yr fell 10 bps to 2.50% APY)
  • Georgia Banking Company (5yr fell 20 bps to 2.75% APY, 1yr fell 25 bps to 2.25% APY)

I’ll have more listings of rate cuts in my CD summary that will be published later today.

If you do think that we are experiencing just a mid-cycle adjustment at the Fed, it may not be wise to load up on long-term CDs. However, even if the Fed isn’t at the start of a long series of rate cuts, I can’t see the federal funds rate returning to where it was before July anytime soon. The process of returning to early-2019 federal funds rate would probably take at least two years.

First, there will probably be at least two more 25-bp rate cuts even if the slowdown and risks are short-lived. Before the Fed would return to a pause period, it would have to be clear that the risks had significantly diminished and that the economy had improved considerably. Then the Fed would return to a pause period where it waits to ensure that the falling risks and the improving economy were able to hold. That pause period would likely be at least six or more months. Then the Fed would start talking about rate hikes. After a couple of Fed meetings, we may finally see a return to rate hikes. Then it may take another year before rates return to where they were in the first half of this year. As you can see, it could take at least a couple of years before we see deposit rates at the level that we saw in the second half of 2018, and that assumes that we’re experiencing only a small economic slowdown.

Since it’s unlikely that we’ll see widespread rate hikes in the next couple of years (even if the economy stays strong), I think it makes sense to allocate more of your savings into mid-term and long-term CDs rather than savings accounts and short-term CDs.

There are still a few 3% CDs that are nationally available at both banks and credit unions. I think 3% CDs will be essentially gone by the fall. A 3% CD special may pop up now and then (like what Navy Federal began offering), but I’m afraid those specials will probably become rare.

The above graph shows the rate trends of the average CD rates. These average rates are based on all the rate data that we have collected over the years. This is an interactive graph. You can choose the term of the CDs (from 3 months to 5 years) and the look-back period (from 3 months to 5 years).

As you can see in the graph, average CD rates for all terms are not rising like they were in 2018 and early 2019. Most of the averages are now starting to decline.

Note: This Fed and economic overview used to be part of my weekly summary, but it will now be a separate post. My weekly summaries will now be focused entirely on deposit rates and deals, and they will be published on Tuesday evenings.


Comments
Robb
Robb   |     |   Comment #1
Thanks Ken for the great write up...always enjoy your insights and bi-weekly CD and Savings table/updates. Keep up the good work!
deplorable 1
deplorable 1   |     |   Comment #3
I agree with Ken's advice for most people locking up at 3.5% or better long term is probably a good idea particularly with the FED cutting rates in a good economy. For me personally I'll take the short term CD specials and add-ons I already have. The short term CD deals work out better when you are using a 2-3% cashback card and taking advantage of 0% no fee balance transfers which need to be paid back in 12-18 months.
#12 - This comment has been removed for violating our comment policy.
Brokered
Brokered   |     |   Comment #4
Thank you FED...
I sold another brokered CD for a profit.
$50,000 at 2.75% due in 7 years
Gain in principal $1,113.00 (2.2%)
Accrued interest $305.14
Total Proceeds $51,418.14
Transaction (bid to sale) 15 minutes.

Obviously, current brokered rates are dismal but it's a very good time to clean house on some aging bad boys. This is my 4th sale in recent months (and the last). The absence of EWP's and the ability to quickly take advantage of stock market dips has made brokered CD's invaluable to me. We have quite a bit tied up in 3.65% CD's which we'll happily sit on.
Sam Kiggle
Sam Kiggle   |     |   Comment #5
All fixed rate CDs rise in value when market rates fall. Google the word DURATION.
Brokered
Brokered   |     |   Comment #6
#5
Hi Sam.
I prefer CURATION but, as always, I do appreciate your insight.
Brokered
Brokered   |     |   Comment #7
#5
Sam,
As a point of process can you explain how a non-brokered CD can be sold as explained in post #4 thus avoiding EWP's?
#8 - This comment has been removed for violating our comment policy.
Brokered
Brokered   |     |   Comment #10
#8
Hi Sam,
Yes, and the bank rep laughed.
FYI the proceeds of the sale in post #4 went to a different higher-yield investment with, of course, attendant risk.
Funds aren't tight, just not working as hard as they should be. We're down to a little over a $1M in CD's (average 3.5%) and the market presented some great opportunities.
Good Luck!
Sam Booger
Sam Booger   |     |   Comment #11
Why would you sell an above market CD unless you need the money?
Mak
Mak   |     |   Comment #27
#11....a better question, why did he buy a 7 year 2.75% CD in the first place? :)
Brokered
Brokered   |     |   Comment #29
#11
I took the PROFIT and moved it into an investment paying a rather high dividend...much better than 2.75%. It's up $848 today and a dividend will arrive in a few months so all is well.
#27
It was the highest rate when I bought it. Aging...happens when time passes.
NYCDoug
NYCDoug   |     |   Comment #42
I'm new at Brokered CDs. Got two of them last year (Wells Fargo & Comenity) at 2.75% & 3.35% respectively. I was surprised to see how rapidly their resale value has risen recently. Am I correct to assume that, as they approach maturity, their market rate will drop down again close to par? And, if I were to sell them early, would I be able to break them up, and sell a partial number of shares (each currently has 250 shares, to stay within insurance protection), or is it an all-or-nothing sale?

Which raises two more points:
1) Would I have been wiser to purchase the originals in multiple lots, just so I could sell off some shares, but not all, at a profit?
2) Given that the market value is currently over $250k, is any of that overage insured, were, say, Wells Fargo to go belly up?
anonymous
anonymous   |     |   Comment #60
#42 -- it might depend on your brokerage, but you should able to sell a portion of a brokered CD. As to insurance, the par value is insured. Nothing else. If you bought at a discount, you get par if the bank fails. If you bought at par, you get par. If you bought at a premium, you get par. What you paid, and what the current value is, are irrelevant. If the par value for your holding is $250,000, that's the insured amount.
Brokered
Brokered   |     |   Comment #120
#60
https://www.fdic.gov/consumers/consumer/news/cnspr13/cdsfrombrokers.html
Search for accrued
"deposit insurance would only cover the principal plus accrued interest"

Obviously, the 250K limit applies with all its variations so a 250K single owner account may not have the interest covered...but it could be depending on ownership. We have a combined 500K FDIC insurance for any brokered CD purchased so our accrued interest is covered (all CD's well below 500K).
MAGA
MAGA   |     |   Comment #9
Nothing wrong with locking in a few 3.5% cd's since the Fed is getting it's cue from the POTUS!
QQQ
QQQ   |     |   Comment #17
Can anyone help? I'm seeking longer, three to five year, no-penalty CDs paying at least 3% APY. Sadly I'm already aware of the two offerings at GTE, so those will not help. Are there any other opportunities out there?
QQQ
QQQ   |     |   Comment #19
Whoops!! Sorry, my error. It's add-on CDs I'm seeking, not no-penalty CDs.
deplorable 1
deplorable 1   |     |   Comment #40
All the good ones are gone: MACU 3.51%/3.75% How about the NFCU CD's 3% for 18 mo. or 3.5% for 5 years. What's wrong with GTE? Maxed out on coverage? What about the 6 month GTE CD's? Even with a straight 1% cashback card you are still looking at 3.26% a year. Not bad for nearly liquid cash.
#18 - This comment has been removed for violating our comment policy.
Cch
Cch   |     |   Comment #30
All playing out as predicted which is why i already locked in the long term 3.5 to 4.10 rates early this year. Grabbing the Navy Fed 3.5% in a few weeks as navy usually changes terms on the first of the month.I love GTE as a default account for all cd's maturing in the next 5 years. In 5 years when all cd's mature its living off the 4% rule until the end.Happy sailing everybody!
Hmmm
Hmmm   |     |   Comment #35
And where will CD rates be five years from now, nobody knows.

That is why decades ago, I took to laddering my CDs. I always receive a nice average interest income without the anxiety of a large number of CDs maturing in an unexpected extremely low interest rate environment.
Cch
Cch   |     |   Comment #46
And are you planning on living off your cd interest until you die? There is no reward for being the richest person 6 feet under...i say spend it while you are alive.
Hmmm
Hmmm   |     |   Comment #52
No, my financial motto has always been "Don't spend like there is no tomorrow, but also don't save everything for tomorrow".
Thankful
Thankful   |     |   Comment #31
My monthly Social Security income is now my "CD", giving me a nice $1600 every month. I can easily live comfortably on that amount. That's far more than I was earning from a variety of small certificates.

When my last few CDs mature in Sep 2020, I may just call an end to the rate-chasing game. I will continue to check savings account rates and NPCDs, but that's about it. Thanks for a great website.
#33 - This comment has been removed for violating our comment policy.
Breaking News
Breaking News   |     |   Comment #58
The yield on the benchmark 10-year Treasury note broke below the 2-year rate early Wednesday, an odd bond market phenomenon that has been a reliable, albeit early, indicator for economic recessions.

The yield on U.S. 30-year bond fell to an all-time low, dropping past its prior record notched in summer 2016.

The moves show increasing worries about the global economy as investors rush into safe havens.
Grateful
Grateful   |     |   Comment #59
Social Security is a nice supplemental income stream that I appreciate very much. Very grateful. (But it also means you are now officially OLD! lol).

I'm no longer quite so concerned about interest rates, and inverted yield curves, and savings rates, and don't need to chase interest rates all over the country. The extra income is very welcome. I will enjoy it, and use it wisely for as long as it lasts or until my health gives out. The SS income also allows me to donate more money to my favorite charities. It's all good.
Duckworth
Duckworth   |     |   Comment #65
Always nice to hear from someone that works for SSA in their marketing & propaganda department.
deplorable 1
deplorable 1   |     |   Comment #72
Until one day you get this note:
From the Social Security Dept. Sorry we are currently broke and as such can no longer afford to pay you what we promised. Your benefit has been reduced by 50% and more reductions are possible. Thank you for understanding.........................Your pal, Uncle Sam
#80 - This comment has been removed for violating our comment policy.
#91 - This comment has been removed for violating our comment policy.
#109 - This comment has been removed for violating our comment policy.
YouKnowWho
YouKnowWho   |     |   Comment #138
Just to add one more deleted reply to this comment since it looks like they are already a slew of them...you mean....

...Your pal the Democrats
Duckworth
Duckworth   |     |   Comment #64
It's over.
RichReg
RichReg   |     |   Comment #66
"....Johnny."
Vote Joe
Vote Joe   |     |   Comment #67
Trump sure is messing up the good Economy. And he caved in with the China tariffs. Joe will get us back on track when he's elected.
RichReg
RichReg   |     |   Comment #68
Sure....if he doesn't fall off of his own track while having a 'Senior' moment.
"Help, the President's fallen and he can't get up...!"
Stable Genius
Stable Genius   |     |   Comment #69
Genuinely curious what you mean RichReg.

Trump changes his mind on the most important matters several times a day. I realize his supporters pretend it is all part of a master plan, but it is hard to imagine a more confused president than Trump.
#84 - This comment has been removed for violating our comment policy.
#90 - This comment has been removed for violating our comment policy.
#94 - This comment has been removed for violating our comment policy.
#93 - This comment has been removed for violating our comment policy.
#92 - This comment has been removed for violating our comment policy.
#97 - This comment has been removed for violating our comment policy.
YouKnowWho
YouKnowWho   |     |   Comment #139
#69

Changing your mind about tactics does not mean changing your mind about a goal. Trump is still for everything he was for when he was running. And he's probably delivered more of his campaign promises already then any other president at least in modern times. Changing tactics is the sign of a nimble mind that re-evaluates information as the world changes.

Unlike Biden, who has done a one-eighty on every one of his previously "firmly held beliefs" to shamelessly court the ignorant Democrat vote.

Biden is the only candidate in history who ended up making the same gaff twice on the same day even after he was already informed by his own people that what he was saying was wrong.

Now there's a master plan! Gaff your way into the presidency!

Clearly early-stage Alzheimer's.
#71 - This comment has been removed for violating our comment policy.
MAGA
MAGA   |     |   Comment #83
deplorable I went through some of you old comments last night and went over to the doc and started looking though their stuff. Royal Credit Union is offering a $1000 bonus for new money of $100k. They offer $500 opened before August 31 and another $500 if you keep it there a year. Also the doc said you could put $10k on credit card but it's unclear if it's a lower amount now. Six month cd rate is 1.41% APY They also said the double cash codes as a purchase!
deplorable 1
deplorable 1   |     |   Comment #85
It's a no go from the Doc and I agree the overall ROI is too low on $100,000. Using DoC's numbers $1,360 in interest at 1.36% +$1,000 bonus +$200 for cc funding = $2,560 about the same as a 2.5% savings for a year. The smaller bonuses usually have the better ROI.
Case in point I'm doing a Huntington 5 checking $200 bonus in 90 days and I only need to bring over $1,000 the ROI would be 80% for 90 days and 20% if you kept it open for a year. I already have a $4,000 CD with them to take care of the $5,000 relationship balance needed to avoid any monthly fees. Citibank usually has some good ones as well. Ken has a good short list on the bottom of the savings and checking dropdown menu.
MAGA
MAGA   |     |   Comment #96
deplorable you combed over all the offers on that page?
deplorable 1
deplorable 1   |     |   Comment #98
On DoC? Not recently but I have this page bookmarked for future reference:
https://www.doctorofcredit.com/best-bank-account-bonuses/
There are always some good ones on this list.
MAGA
MAGA   |     |   Comment #108
deplorable I checked out that list and see some of those offers can be pulled very quickly once posted. For example the US Bank $300 one was posted yesterday and today it's posted as expired as the bank pulled the offer. You ever get app denied for any of those offers?
deplorable 1
deplorable 1   |     |   Comment #113
Not yet but there is usually a expiration date posted. If you can't find one it it is best to call and check. So far I have not been denied any bonuses but i vet them very carefully and read all the fine print. Out of all the available bonuses I might find maybe 5 that are worth the effort at any given time. The comments section on DoC is very helpful in determining whether the bank usually pays off.
YouKnowWho
YouKnowWho   |     |   Comment #140
What hangs me up is that most of them require direct deposit... Which I don't have available.
deplorable 1
deplorable 1   |     |   Comment #155
Same here that's why there are only a select few good ones at any given time. The Citibank $200 and Huntington $200 are 2 of the best with no DD requirement. My wife has done the DD for the Chase bonuses for $600 but it's a pain to switch back.
Hooked
Hooked   |     |   Comment #172
MAGA, the US Bank bonus offer is still good. I signed up yesterday.
#86 - This comment has been removed for violating our comment policy.
#87 - This comment has been removed for violating our comment policy.
#95 - This comment has been removed for violating our comment policy.
#99 - This comment has been removed for violating our comment policy.
#102 - This comment has been removed for violating our comment policy.
#88 - This comment has been removed for violating our comment policy.
#89 - This comment has been removed for violating our comment policy.
#130 - This comment has been removed for violating our comment policy.
deplorable 1
deplorable 1   |     |   Comment #100
For those invested in the market don't panic sell on the yield curve inversion/recession fear mongering. The MSM seems to be in a full on press to create a recession based on fear. They are aware that if they can convince enough people that a recession is imminent that it can be a self fulfilling prophecy. All you have to do is ask yourself which political party benefits if there is a recession and which party does the media carry the water for.
bbb82
bbb82   |     |   Comment #101
So if the other party were in power and the yield curve inverted, nobody would make a peep about it? That's noble thinking lol

As much as Bankrupt Trump doesn't want to admit it, his trade was does have an effect on the global economy.
#103 - This comment has been removed for violating our comment policy.
deplorable 1
deplorable 1   |     |   Comment #111
For sure the trade wars are having some effect on the global economy but this is far from the only factor. All I'm saying is no need to panic as the U.S. economy is still in pretty good shape.
#114 - This comment has been removed for violating our comment policy.
#104 - This comment has been removed for violating our comment policy.
#105 - This comment has been removed for violating our comment policy.
Sam Kiggle
Sam Kiggle   |     |   Comment #110
Deplorable is ignoring what an inverted yield curve means.

The inversion means people expect rates to fall. This is not a liberal plot, this is the market's expectation. The expectation of the top 0.1% who owns 80% of the world's resources.

Media companies are also owned by billionaires. Pretending they want to give their companies away in a socialist coup is nonsensical.
deplorable 1
deplorable 1   |     |   Comment #112
I didn't say the yield curve inversion is a liberal plot. That would be a conspiracy theory. All I'm saying is that low or negative rates around the world is throwing the yield curve way off. This brings into question it's reliability to accurately predict a recession. The fear mongering in the media is purposefully intended to bring about a recession. Like i said if enough people believe that a recession is just around the corner and then act accordingly it CAN become a self fulfilling prophecy.
#115 - This comment has been removed for violating our comment policy.
milty
milty   |     |   Comment #116
It appears inversion on the long-term bonds historically precedes a recession . . . but maybe not this time, don't think that's being predicted yet as an absolute. In any case, I work for a Fortune 100 company and layoffs and belt tightening have started (notwithstanding the tax reform act) . . . me thinks investors and savers should beware, especially if retirement is in sight.
#117 - This comment has been removed for violating our comment policy.
#123 - This comment has been removed for violating our comment policy.
#124 - This comment has been removed for violating our comment policy.
deplorable 1
deplorable 1   |     |   Comment #129
@Milty: I don't think a recession is coming due to yield curve inversion and here is why:
If you look at the weakening global economy combined with Trump's trade wars this has caused other countries to lower their interest rates substantially. So demand for long term U.S. debt has increased causing yields to drop. I don't think this is the normal ebb and flow of rates. Now you could argue that it's all Trumps fault due to the trade wars and you would be partially correct but the best time to win a trade ware is when your economy is strong. I believe that if Trump stays the course that we will eventually win all trade wars and that interest rates will level off. Until then we may be in for quite the bumpy ride both with interest rates and the stock market. Short term pain for long term gain. The only other choice is to let other countries keep taking advantage of us regarding trade.
milty
milty   |     |   Comment #145
@D1: I have never been really convinced that other countries have been taking advantage of us. I mean what other countries have military bases in the U.S. and can enforce economic sanctions on us, and what other countries forced U.S. corporations to relocate or outsource. This trade war seems mostly just for sound and fury, and except for costing the U.S consumer more I doubt its reversal will be a panacea. Also, I thought most other countries already had dismal if not negative savings rates, not sure how much room they have left to cut. The inversion I think is due to a perception that our economy is slowing, which don't know why, but am guessing that the tax break effect has worn off. IMO, we need higher wages and higher savings rates ;-)
deplorable 1
deplorable 1   |     |   Comment #147
@Milty: All you have to do to see how other countries have been hitting us on trade is to look at what tax rate WE charge them on their goods sold here and what tax rate THEY impose on our goods sold there. Trump actually suggested FREE trade as in 0% tax on all imports and exports and the other countries threw a absolute fit on that suggestion because then they wouldn't be able to shaft us financially. If we didn't have bases around the world it would be harder for our military to protect our allies around the world for FREE.
#118 - This comment has been removed for violating our comment policy.
#126 - This comment has been removed for violating our comment policy.
#127 - This comment has been removed for violating our comment policy.
deplorable 1
deplorable 1   |     |   Comment #128
The MSM/Democrats are trying to bring on a recession for sure but I was referring to the yield curve itself. It's not like they are controlling that. The only thing they can control is trying to scare people into believing that the yield curve inversion is the harbinger of doom for the economy. I wasn't referring to the deep state Russian collusion hoax which is still being investigated just the yield curve.
Jack
Jack   |     |   Comment #131
deplorable 1, the yield curve itself is also manipulated by the dems, because they want the spending bill to include short term financing project ($3 trillions already allocated) for 1-2 years and they never agreed on a long term budget, where the 10 year interest rates will be affected. Therefore the inverted yield curve is artificial and will correct itself in a year or two.
deplorable 1
deplorable 1   |     |   Comment #148
Their are many factors effecting the yield curve and if rates remain low or negative around the world the curve could be permanently inverted. How will it be a recession predictor then?
#151 - This comment has been removed for violating our comment policy.
#153 - This comment has been removed for violating our comment policy.
#160 - This comment has been removed for violating our comment policy.
#163 - This comment has been removed for violating our comment policy.
InterestYields
InterestYields   |     |   Comment #168
Re #163: Google search link should be free & pertinent excerpt included. Deposit account holders are less interested in partisan politics and more interested in dealing with facts like calls for lowering to emergency levels of Fed funds rate..
deplorable 1
deplorable 1   |     |   Comment #178
@168: You may be right but politics and policy is having a direct effect on interest rates and this is the only place where politics is allowed to be discussed on this site. Interest rates don't exist in a vacuum.
InterestYields
InterestYields   |     |   Comment #182
#178: Unless-until they get removed anyway;), I could PM Ken if-when I care enough.. Independents see too much partisan blaming as scapegoating+propaganda-disinformation.. "Clueless Jay Powell" as Trump calls him was nominated to the Fed Chair position by him, now without regard to increasing inflation, Fed independence or weakening Fed's power when really needed Trump says Fed should cut rates by at least 1% ‘with perhaps some quantitative easing’ or is anything that dares to question Trump just "fake news"?
#159 - This comment has been removed for violating our comment policy.
Y??
Y??   |     |   Comment #154
Everything is subject to manipulation by those that have the power and resources to do so, be it the yield curve, interest rates, inflation rate, stock and bond market, etc. Trustworthiness is a thing of the past.
#132 - This comment has been removed for violating our comment policy.
#133 - This comment has been removed for violating our comment policy.
#136 - This comment has been removed for violating our comment policy.
#137 - This comment has been removed for violating our comment policy.
#106 - This comment has been removed for violating our comment policy.
Mak
Mak   |     |   Comment #107
Brokered gave me a good idea... sold a 3.25% maturing 9/2023 for a 4% profit and I will now move that into either the Navy 3.5% CD or one of my Mountain America 3.51% add ons.... decisions decisions
Brokered
Brokered   |     |   Comment #119
#107
Fantastic!!
Common Cents
Common Cents   |     |   Comment #121
Why not stick with Brokered CDs?

Kidding, silly question.
Y??
Y??   |     |   Comment #143
Because there're Broken.

Silly question, silly answer.
#122 - This comment has been removed for violating our comment policy.
#125 - This comment has been removed for violating our comment policy.
#134 - This comment has been removed for violating our comment policy.
#135 - This comment has been removed for violating our comment policy.
Truth
Truth   |     |   Comment #141
Wow,
The silence opinion police are out in force. So much for the one and only open forum.
#142 - This comment has been removed for violating our comment policy.
#146 - This comment has been removed for violating our comment policy.
Cch
Cch   |     |   Comment #150
It appears the financiers do in fact want to take the US to negative or below negative yields.What a sorry state of affairs for savers.Those that ladder their CD's and will be having many mature over the next 1 yo 4 years may suffer a lot of pain.Think hard about the risk/reward now about breaking some of those cd's and moving into the 3.5% NFCU offering which will set you up for 5 years.Of course in a doomsday scenario all hell good break loose and banks/CU's good adjust their rates down but we will fight that battle if and when it comes.Other option is high yield but to risky for me at this time.Good luck.
#152 - This comment has been removed for violating our comment policy.
Brokered
Brokered   |     |   Comment #157
As Europe is telling us negative rates are a sign of abject failure. I think the FED will avoid negative rates at all costs if for no other reason than to preserve faith in the monetary system.
Y??
Y??   |     |   Comment #164
I'm betting we here in the United States will never see negative rates, not in our lifetime.

All this gloom and doom when most people commenting here are sitting in the "Catbirds Seat" with hoards of cash. It's hilarious!
deplorable 1
deplorable 1   |     |   Comment #166
I hope not but even if it isn't imposed on savers 0% is still a negative yield when taking into account inflation. I just got my car insurance bill in Michigan so don't tell me about how low inflation is. You would think they could fix the roads with all that cash but we still have some of the worst in the country.
Reality
Reality   |     |   Comment #171
#166
If you do all the computations (interest, taxes, inflation) most savings is already negative.
MAGA
MAGA   |     |   Comment #169
Cch no doubt we are going lower whether the Fed wants to or not. US cannot compete with other countries at negative rates. The good news is savers can make a few bucks now that we know what the game plan is. Got some big cd's coming soon and I need to make some adjustments. I'm content with 3.5% for the next 5 years and with a few other ideas I can make it work.
milty
milty   |     |   Comment #177
When loan rates go negative, then I will jump back into stocks . . . . In the meantime, wish politicians would leave the Fed alone, nothing wrong with a recession as along as unemployment stays low. BTW, a tip of the hat to D1 for his sage advice about using CCs to fund CDs . . . it indeed works and is a good way to beat the Fed . . . much thanks!
#173 - This comment has been removed for violating our comment policy.
#174 - This comment has been removed for violating our comment policy.
Brokered
Brokered   |     |   Comment #175
Anyone notice the inverted yield curve reign of terror is over?
Patty Cake
Patty Cake   |     |   Comment #176
You might want to check out the wikipedia page to see how it works.
Trump wants 1% cut
Trump wants 1% cut   |     |   Comment #179
Trump still hammering the FED.
Today, President Donald Trump raised his demands Monday on the Federal Reserve, calling for the central bank to cut interest rates by a full percentage point and to restart its crisis-era money-printing program.

In a pair of tweets again aimed at getting easier monetary policy, the president said the Fed has been hampered by a “horrendous lack of vision” and said it should institute 100 basis points worth of reductions to its benchmark rate.

CNBC.com
deplorable 1
deplorable 1   |     |   Comment #180
Do you think he just wants low rates temporarily until the trade negotiations are done due to the trade deficit? Or do you think he just wants low interest rates permanently to boost the stock market/service the debt etc. I sure hope it's the former for the sake of us savers.
Sam Kiggle
Sam Kiggle   |     |   Comment #181
Dr D, are you referring to the trade deficit which continues to grow despite the tariffs?

I doubt Trump has a clue what he wants, other than inflated assets to match his ego.
Y??
Y??   |     |   Comment #183
I think it's a "no brainer" President Trump wants low rates to boost the stock market/service the debt etc. It's an election year coming up, plus it helps his personal business enterprises. Any politician would do the same if in his position right now.

Everything in this world it temporary. It's just a matter who is measuring the time frame.
#184 - This comment has been removed for violating our comment policy.
#186 - This comment has been removed for violating our comment policy.
#187 - This comment has been removed for violating our comment policy.
#194 - This comment has been removed for violating our comment policy.
Diogenes
Diogenes   |     |   Comment #185
@180: Temporarily, to boost stocks to help get reelected. After that doubt he cares what happens. Am betting he declares trade victory in 2020 regardless of rates, also to boost stocks right before election.
sinking ship
sinking ship   |     |   Comment #188
Nobody, but nobody in DC gives a Rat's *** about us "savers."

Maybe it's time to start *spending* some of that hoard? Break open those wallets, fellas! Help the economy! I bet about 90 percent of you guys don't even need the interest. (I don't. Thankfully). I think most of you just enjoy the rate chasing "game." As deplorable once said, "It's a hobby."

Ok, lets start a poll: When it's all said and done, where will CD interest rates be Dec 31st? Not the Fed rate..... CD rates. The winner gets a free dinner with deplorable. LOL!
Y??
Y??   |     |   Comment #192
" bet about 90 percent of you guys don't even need the interest. (I don't. Thankfully). I think most of you just enjoy the rate chasing "game."

I would bet on that before I'd place a bet on where CD interest rates will be on Dec 31st.
DCGuy
DCGuy   |     |   Comment #197
First negative mortgage interest rate loan is available. You pay back less than what you borrowed. A real estate investor's dream.
https://www.theguardian.com/money/2019/aug/13/danish-bank-launches-worlds-first-negative-interest-rate-mortgage
Patty Cake
Patty Cake   |     |   Comment #198
Wow DCGuy, thanks for the heads up.

Have you heard about the inverted yield curve?
Truth
Truth   |     |   Comment #203
#197
Read the whole article and others like it.
FEES will make the loan positive.
deplorable 1
deplorable 1   |     |   Comment #189
I'm wondering how long rates will stay low since we have 4 issues effecting rates currently and pushing them down:
1. Trade wars/trade deficit
2. 23 trillion debt
3. Low global interest rates
4. the failing global economy
I don't see rates going back up until at least 2 of these issues are resolved. So 2021 at the earliest. Whoever locked in those 4% long term CD's good call!
Sam Kiggle
Sam Kiggle   |     |   Comment #190
Dr. D, none of these, not a one, is "new" in 2019. When you forecast five handles.
deplorable 1
deplorable 1   |     |   Comment #193
Wrong Sam 3 and 4 have gotten worse and that's effecting the yield curve.
#195 - This comment has been removed for violating our comment policy.
Sam Kiggle
Sam Kiggle   |     |   Comment #196
Whingy bi tches.
Thankful
Thankful   |     |   Comment #191
Except for the ocassional specials, my guess for cd interest rates is they will average 1.5% across the board. (Currently, after taxes & inflation I barely break even NOW!)
With all these rates dropping, if people aren't locked in above 3.5%, it may not be worth it to keep playing the game?

Well, one positive thing, is I will have a much smaller tax bill in the near future. Lower interest income, but less taxes. It is what it is. Be thankful. The financial world is not coming to an end.
gregk
gregk   |     |   Comment #200
"If people aren't locked in above 3.5%, it may not be worth it to keep playing the game".

Why not? What's the alternative?
Fellow Addicts Unite!
Fellow Addicts Unite!   |     |   Comment #201
#200. What's the alternative? Nothing, if this is what you want to do all day.
gregk
gregk   |     |   Comment #207
What's the "this" anyone is doing "all day"?
Berlin
Berlin   |     |   Comment #199
Wide implications as Germany teeters toward recession
By DAVID RISING

BERLIN (AP) — Germany, Europe’s industrial powerhouse and biggest economy, with companies like Volkswagen, Siemens and BASF, may be entering a recession, according to a gloomy report from the country’s central bank Monday — a development that could have repercussions for the rest of the eurozone and the United States.

https://apnews.com/7eeaa0b5fde44b98a4f8dc896da295a3
Euro
Euro   |     |   Comment #202
Germany. The first dominoe falling?
Truth
Truth   |     |   Comment #204
#202
Germany's getting payback for foolishly bailing others out and a truly destructive immigration policy. The rest of the EU will suffer too.

The good old USA will probably avoid recession this time around. Our economy is moe resilient than it was and things are looking good!! Go spend some of that tax break...I know we are.
deplorable 1
deplorable 1   |     |   Comment #205
Merkel was Germany's Obama.
Sam Kiggle
Sam Kiggle   |     |   Comment #206
Deplorable, considering you were completely unaware that the United States had the highest global interest rates for the past decade, instead claiming they were "ZERO" you should refrain from offering an opinion on global finance.
Pmurt
Pmurt   |     |   Comment #208
It's a huge mis-perception to believe FI's in any EU countries are paying "negative interest rates" on depositor accounts. Negative rates in fact apply only to what EU Monetary authorities "pay" member banks to hold reserves on deposit with the Central Bank, the purpose being to motivate those banks to lend the funds and thereby stimulate economic activity. In Germany depositors can still easily earn .35% to .50% on liquid savings accounts, - not much, but if those rates ever went negative it would create complete havoc.
Federal Reserve, the Economy and CD Rate Forecast - August 6, 2019

Last week the Fed cut rates for the first time in more than ten years. The target range for the federal funds rate was lowered 25 basis points to 2.00%-2.25%. It wasn’t enough for the markets which wanted a larger cut and more certainty on future cuts.

The FOMC statement justified the cut based on “global developments” and “muted inflation pressures”. In a press conference after the meeting, Fed Chair Jerome Powell told reporters that “it’s not a long cutting cycle, in other words, referring to what we would do when...

Continue Reading
Federal Reserve, the Economy and CD Rate Forecast - July 30, 2019

The Fed’s two-day meeting started today. The meeting announcement is scheduled for 2:00 PM EDT Wednesday. Following the announcement, a press briefing by Fed Chair Jerome Powell will take place. I’m afraid there appears to be a near certainty that the Fed will cut the target federal funds rate. As this MarketWatch article describes, the latest inflation news gives the Fed what it needs to justify a rate cut:

At least most analysts are expecting only a 25 bp rate cut at this Fed meeting. The main uncertainty for the meeting...

Continue Reading
Federal Reserve, the Economy and CD Rate Forecast - July 23, 2019

I’m afraid that it looks very likely that there will be a 25 bp rate cut at next week’s Fed meeting. In a speech last Thursday, the New York Fed President John Williams sounded like he might be pushing for a 50 bp rate cut. According to the Wall Street Journal:

Even though Williams had given similar speeches in the past, the timing of this speech had the markets thinking that he was giving a signal. However, in a rare move, the New York Fed came out and told reporters that...

Continue Reading
Federal Reserve, the Economy and CD Rate Forecast - July 16, 2019

Today’s speech by Fed Chair Jerome Powell and his Congressional testimony last week have been interpreted by the markets and by many economists that the Fed will likely cut rates at its July 30-31 meeting. In the speech delivered today at a conference in Paris, the Fed Chair essentially repeated what he said last week about his view of a strong U.S. economy with growing risks:

The minutes from the June Fed meeting were released last week, and according to this MarketWatch article, the “minutes just show that Powell has the...

Continue Reading
Federal Reserve, the Economy and CD Rate Forecast - July 9, 2019

The June jobs report that was released last Friday wasn’t strong enough to convince the Fed to forget about a rate cut at its next meeting (July 30-31). However, it was strong enough to pretty much end talk of a 50-bps rate cut. On Thursday, the Department of Labor will be releasing the Consumer Price Index for June. The consensus is for a flat CPI with a rise of 0.2% in core CPI. If the inflation data meets or is below consensus, that will strengthen the case for a 25-bps...

Continue Reading

More Past Offers