Are rates headed down soon?

[disneysteve]

I've seen a few articles recently suggesting that now is the time to lock in CD rates as we're probably at the peak. Then in Sunday's paper, I saw a bank ad that was paying more on their 6-month CD's than they are on their 12-month CD's. That seemed like an ominous sign.

[sweeps]

Re: Are rates headed down soon?

I wouldn't bet against it. Actually bonds might be a good investment for the next 2 or 3 years.

[Bookie]

Re: Are rates headed down soon?

Interesting that you should ask because I was reading a piece on exactly the rate inequity you describe. Discussion here.

Smart money seems to expect a decline in rates next year. The tug of war between recession and inflation seems to favor a looser money policy.

[zabbkoff]

Re: Are rates headed down soon?

And here's a CNN link on the subject as well.

Guess the next year or so is anyone's guess.....

[tmango]

Re: Are rates headed down soon?

I can say with 100% certainty that they either are going down or are not going down.

[disneysteve]

Re: Are rates headed down soon?

I can say with 100% certainty that they either are going down or are not going down.

As they say, economists have accurately predicted 9 of the last 5 recessions.

[TBH]

Re: Are rates headed down soon?

I can say with 100% certainty that they either are going down or are not going down.

Augh! This sounds exactly like something my partner would say.

[tmango]

Re: Are rates headed down soon?

Augh! This sounds exactly like something my partner would say.

Sorry couldnt resist. In truth I think they will go down, but then I've thought that all my life.. i guess i am a financial pessimist

[sweeps]

Re: Are rates headed down soon?

Bernanke: Interest rate cuts unlikely

[JBinKC]

Re: Are rates headed down soon?

It really depends upon how much Bernanke values the depreciation of the real estate market vs the strength of the dollar in his decision making. I don't really envy the position he is in as he is just trying to minimize the pain of our bloated personal and government debt.

[ren]

Re: Are rates headed down soon?

It really depends upon how much Bernanke values the depreciation of the real estate market vs the strength of the dollar in his decision making. I don't really envy the position he is in as he is just trying to minimize the pain of our bloated personal and government debt.

You know, with the Dollar being at a 14 year low against the Pound and a 20 (?) month low against the Euro, it would be pretty risky to lower rates now. China's pegged the Yuan to the dollar, so they would not be amused if we kill the dollar to reinflate the housing bubble. Additionally, I think I heard that France and England are both major holders of US treasury notes; if rates drop again on a dollar that is losing value, they may dump their holdings and really accelerate the process.

Not good. Not good at all. I do not envy Mr. Bernanke his job.

[kimiko]

Re: Are rates headed down soon?

GMAC drops their rate to 5.25% APY, although my account is still showing 5.3

[disneysteve]

Re: Are rates headed down soon?

There are a couple of different articles in Kiplinger's this month discussing rate cuts in 2007 and they seem to think it is pretty certain. The articles talk about how to invest your cash, when to lock in with long term CDs, the expectation that the rate curve will normalize, etc.

[Bookie]

Re: Are rates headed down soon?

And here's a different perspective on the direction of rates. This article argues that there will be competition for deposits and rising rates to attract savings.

You pays your money and you takes your choice.

[disneysteve]

Re: Are rates headed down soon?

And here's a different perspective on the direction of rates.

Actually, that article doesn't really say anything that different:

"But he does expect that, during the next year, longer term CDs will start paying better rates than shorter-term CDs."

"It's anticipated that the Fed has probably stopped raising rates, and that the next move will be a decrease. But we don't know if that will be in two months or 12 months."

So the conclusion in that article seems to also be that the inverted yield curve will return to normal and that the next rate change will be downward.