It has been another bad week for bonds. As the stock market has been rallying (although, I’m not really sure why?), Bond prices have decreased and yields risen (bond prices and yields have an inverse relationship). This happened in June as well. Last month, some certificate of deposit interest rates moved higher, but that hasn’t really taken place here in July.
The highest online 1-year interest rates are in the 2.50% range. Competitive rates are in the 2.00% to 2.25% range. The yield curve is fairly flat on terms of 1-year to 3-year. There is usually a tiny uptick for investing in 2-years Certificate of Deposit. Most 2-year CD rates are about 0.25% higher than the 1-year, and the 3-year is usually another 0.25% above that, around 2.75%. Good 5-year rates are around 3.40 to 3.60% APY.
likely continue to watch this back and forth between the stock market and bond market. Banks probably won’t respond with increased rates Since they too realize it is a back and forth, give and take. The Fed will have to raise Fed Funds to drastically change CD rates. That may not happen for another 9-months. Keep in mind that short-term CD Rates will probably move up quicker than longer-term rates, eventually leaving us with a flat or nearly flat yield curve. If at some point the curve inverts again I would lengthen your terms on your CD investments. Lower rates are usually just around the corner from an inverted curve. Yet, I think we are in for a enduring time of low rates. The economy continues to languish. Every time people discuss a greenshoot, indicators comes out that it in reality was a brownout.
One interesting way to search for banks is to enter in the rate and the year. This usually brings up a list of web pages with current online CD rates. And if, for instance, you are trying to find the hard to find 3%, you’ll probably locate it within the top twenty or so sites. You can also search by state. For example, you could type New Jersey CD rates for high rates in NJ – New Jersey You can also try searching by region, city, or country. Search terms like “Best CD Rates”, “Bank CD Rates”, etc. may be too broad. But, go ahead have some fun.