If you were on a big weekend in Vegas, and you kept doubling down on red while playing blackjack, you’d be taking your chances — and maybe going home on a Greyhound bus.
But betting on CDs going in the red week after week is a reasonably sure bet in the certificates of deposit sector these days.
Why not? After death, taxes and Tom Brady coming through on third-and-ten, there’s no bigger certainty in life right now than CD rates edging downward.
Let’s read’em and weep. Five-year CDs, as measured by the BankingMyWay National CD Rate Tracker, fell to 2.29% from 2.3% this week.
Sliding down the ladder, four-year CDs edged back to 2% from 2.01%, while two-year CDs fell to 1.47% from 1.49%. One-year CDs slid to 1.03% from 1.04%, and six-month issues fell to 0.689% from 0.691%.
Three-month CDs, bucking the odds, remained at 0.45%
There’s really no blinking neon sign pointing to a specific reason why bank CDs continue to do so poorly. All the usual suspects apply: the Federal Reserve’s tight interest rate policy, anxious consumer sentiment, lousy weekly employment numbers (with jobless claims higher than expected last week) and a burgeoning federal deficit weighing on the economy like a cinderblock in the trunk of a VW Bug.
You can’t really blame CD investors for seeing red this week. After all, a big reason why the Federal Reserve is sitting on interest rates is to boost the balance sheets of many of the same banks whose free-wheeling lending helped push the economy off a cliff. Rubbing more salt in the wound, bank investors have to abide by an economic policy created by the same Washington pols that encouraged banks to make those dubious loans in the first place.
Cobbled together, it’s a horror show that no amount of pumpkin martinis will help alleviate at this weekend’s Halloween party.