This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Will Interest Rates Rise Or Fall In Q4?





Going into the third quarter of 2013, it looked reasonable to predict that interest rates would rise for the remainder of the year. Now it looks more like rates may remain close to where they are today. What has changed?

A darkening outlook

A number of things changed from the beginning of the third quarter to the beginning of the fourth quarter:

  1. Economic momentum has stalled. Most crucially, job growth has slowed in recent months. This shows that employers aren't confident, and it means there won't be as many new paychecks pumping dollars into the economy.
  2. Inflation has cooled. Inflation flared up in June, but has quickly subsided. This isn't all bad news, but it is beginning to look as though languishing prices are just one more symptom of a weak economy.
  3. The budget and debt-ceiling standoffs will dampen growth. No matter how long these showdowns last, failing to fund the government takes money out of the economy and undermines confidence.
  4. The Fed has recommitted to low interest rates. Who said anything about tapering? The Fed seems to have backed away from earlier hints that reductions in its bond-buying program were imminent, and may be unlikely to make a major change during the transition from Ben Bernanke to his successor.
  5. The climate of uncertainty has returned. The year began under a cloud of uncertainty about sequestration. It ends with further uncertainty about the budget and the implementation of Obamacare. Uncertainty is bad for business.

The impact on bank rates

Under these circumstances, it would be easy to forecast a decline in deposit rates on savings accounts, money market accounts and CDs -- if those rates weren't already near zero. A few months ago, with the economy heating up and competitiveness increasing among online savings accounts, it appeared that these rates were poised for a rise. With the economy looking more doubtful, banks are going to be very slow to raise rates. That leaves switching accounts as the sole possible means for consumers to obtain higher rates.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,135.72 +38.82 0.21%
S&P 500 2,101.04 +2.51 0.12%
NASDAQ 4,982.8090 +15.6680 0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs