It has been another depressing week for bonds. As the stock market continues to rally (although, I’m not really sure why?), Bond prices have gone down and yields risen (bond prices and yields have an inverse relationship). This happend in June as well. In June, some CD interest rates moved up, but that hasn’t really happened here in July.
The best online 1-year interest rates are in the 2.50% range. Good 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 small uptick for going to a 2-years Certificate of Deposit. Most 2-year CD rates are about 0.25% above than the 1-year, and the 3-year is usually another 0.25% over that, around 2.75%. Good 5-year rates are near 3.40 to 3.60% APY.
Typing the year and rate will produce some interesting rate data. This usually brings up a list of web pages with current online yields. And if, for instance, you are trying to find the elusive 3%, you’ll probably locate it within the highest twenty or so pages. You can also search by state. For example, you could type New Jersey cd rates for high rates in New Jersey
Over the next few months, the stock market and bond market will probably continue this frustrating give and take. Since the banks also know it is a back and forth, give and take, they probably won’t respond with increased online CD rates. I think it will take the FOMC to raise Fed Funds to drastically change CD rates. That may not happen for another 9-months. Keep in mind that short-term interest rates will probably move up quicker than longer-term rates, at some point leaving us with a flat or mostly flat yield curve. If at some point the curve inverts again (as it did in 2006/2007), I would lengthen your terms on your certificate of deposits. Lower rates are usually just around the corner from an inverted curve. However, I think we are in for a protracted time of low yields. The economy isn’t improving. Everytime talking heads mention a greenshoot, data comes out that it in reality was a brownout.
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