cds

CD Rate Trend Index

November 2009
Panel: Short-termPanel: Long-term
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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.

Most of our panel clearly thinks rates are stuck in neutral for a while, but there is a growing hint of optimism that higher rates are not inconceivable.

Industry experts and Bankrate commentary
Experts' commentsShort-termLong-term
Without the support of the U.S. government as a major purchaser of U.S. Treasuries (a major purchasing program by the Fed ended in October), it will be interesting to see if rates stay low. With the massive amounts of U.S. Treasury debt coming to the market, the path of least resistance for interest rates is higher. We expect rates to rise gradually, however. We will continue to ladder bonds (and CDs) but with a preference toward a short-to-intermediate maturity ladder (three months to five years) versus a more typical three months to 10 years. If rates on Treasuries go up incidentally, expect rates on CDs to follow.
Herbert G. Hopwood, CFP, CFA, president, Hopwood Financial Services Inc., Great Falls, Va.
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Rates are taking their cue off the economy and the jury is still out on whether we are really on the road to recovery or not. Every positive seems to be met with a negative, like corporate earnings are better, but unemployment is still high, for example. It will most likely take a little longer to determine if the worst is behind us. Until then, I expect rates to pretty much stay where they are.

We are hedging inflation for fixed-income investors with insured municipal bonds. And we're balancing investments between stocks and bonds to lower risk and maximize potential returns. Those returns haven't been great lately, but the strategy has proven useful over time.
Jason P. Flurry, CFP, president, Legacy Partners Financial Group LLC, Woodstock, Ga.
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The dramatic decline in the dollar could shortly lead to higher rates in an attempt to mitigate the slide, but we will have to wait for the November Fed meeting to see what it signals before we have a better idea of future rates.
William Z. Suplee IV, CFA, CFP, ChFC, CASL, Structured Asset Management Inc., Paoli, Pa.
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Do not expect much change in rates in the next two to three months.
Ben Tobias, CFP, Tobias Financial Advisors, Plantation, Fla.
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In my opinion, serious inflation is at least 12 to 24 months away. I would expect (gross domestic product) GDP growth to be around 3 percent in 2010 as the consumer remains cautious. Our excessive debt fueled by massive government intervention over the past year will eventually lead us to higher than normal inflation.

Slowly build an overweight position in inflation protected securities, commodities, international equities, and fixed income instruments.
Steven J. Lautenschlager, CFP, vice president, First Business Trust & Investments, Appleton, Wis.
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Bankrate's analystsShort-termLong-term
The economy and the stock market have started to get up off the mat, but the same cannot be said for yields on CDs.
Greg McBride, CFA, senior financial analyst, Bankrate.com
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The drift that we're seeing in Bankrate's surveys of CD rates shows continued erosion of 1 or 2 basis points each week with occasional weeks where the rates stay flat. It'll be interesting to follow the Treasury scenario mentioned by Herb Hopwood to see if anything can pull CDs out of the swamp.
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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