cds

CD Rate Trend Index

August 2009
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Will CD rates rise, fall or remain relatively unchanged? Experts and Bankrate analysts provide their insights. Search high-yielding CD and money market accounts.

Sentiment appears to be slowly changing from negative to a more neutral attitude.

Industry experts and Bankrate commentary
Experts' commentsShort-termLong-term
We are not out of the woods yet economically, although everyone seems to be feeling better about things since the stock market has rebounded some. I believe that there could still be enormous losses out there, and Washington is trying each day to determine who's in the best position to take another blow for the team -- with the goal being to cripple, but not kill. All of these potential issues will most likely keep rates at bay for the time being. I expect to see continued dismantling of various pieces of the private business community and the ripple effects they will surely have on the employees, creditors and stakeholders of those involved. While I would like to see a sustained recovery as much as anyone else, I continue to operate through a lens of risk management over reward chasing with an eye toward financial staying power. Good opportunities are beginning to surface again and many more will follow. Keep some powder dry so that you can take advantage of them when the time is right.
Jason P. Flurry, CFP, president, Legacy Partners Financial Group, Woodstock, Ga.
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What should you do now if you've missed the recent equity market rally? First and foremost, assess your true risk tolerance. Determine an allocation that best meets your needs (and still allows you to sleep at night) for meeting your future financial goals. If you are currently (in) underweight equities, dollar-cost-average into equities over the next six to 12 months to increase the weighting to your appropriate level. Diversify your stock and bond holdings. Although there are signs of an improving economy, corporate cost cutting, not increased revenues have been helping companies beat their earnings estimates. Anticipate a slow, methodic economic recovery with continued volatility in the equity markets.

On the fixed income side, focus on short to intermediate maturities with a balance of CDs, high-quality corporate bonds, mortgage-backed securities and Treasuries for core holdings. Include limited exposure to foreign and inflation-protected bonds.
Steven Lautenschlager, CFP, vice president, First Business Trust & Investments, Appleton, Wisc.
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We expect interest rates to be fairly unchanged this month. We are through much of the quarterly earnings season and there will be minimal economic news this month to cause interest rates to have any significant moves in either direction. As a little aside, while the bandwagon is forming that we are near an end to the recession, we are not convinced this is the case. Most public company managements reveal that while things seem to have hit bottom in their specific businesses, most are not seeing a significant uptick in activity. Thus, we believe it will take more time before we can get constructive on forecasting a significant improvement in the economy and a resultant increase in interest rates.
Herbert G. Hopwood, CFP, CFA, President, Hopwood Financial Services, Inc., Great Falls, Va.
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Bankrate's analystsShort-termLong-term
Yields on longer maturities are in a bottoming process while the shorter maturities will continue to drift lower. Nonetheless, maintain a bias toward shorter maturities in order to reinvest once interest rates and inflation begin to rebound.
Greg McBride, CFA, senior financial analyst, Bankrate.com
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We've begun to see some flattening in the short-term yields surveyed by Bankrate.com. That's not to say this is the bottom, but perhaps the steep erosion is letting up.
Laura Bruce, senior reporter, Bankrate.com
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Certified Financial Planners, Chartered Financial Analysts and others with similar qualifications are invited to e-mail us if interested in participating in our CD Rate Trend Index survey. Please state your professional background, title, company name and address.

About the Bankrate.com Rate Trend Index
Bankrate.com surveys experts in the financial planning, banking and mortgage industries to gauge whether certificate of deposit and mortgage rates will rise, fall or remain relatively unchanged. The deposit index panel consists of financial planners and representatives of institutions that offer FDIC-insured CDs to the consumer. The mortgage index panel consists of mortgage banks, mortgage brokers and other industry experts who are actively engaged in providing residential first mortgages to the consumer. Results from the CD Rate Trend Index are released monthly. Results from the Mortgage Trend Index are released each week.

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Product Rate Change Last week
1 Year CD 0.90%  0.02 0.88%
2 Year CD 1.02%  0.01 1.03%
5 Year CD 1.59%  0.01 1.60%
 
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