Uncertainty is once again the rule when it comes to certificate of deposit rates.
This week’s culprit is the expected fourth-quarter earnings results from big banks like Citi (Stock Quote: C), Bank of America (Stock Quote: BAC), Morgan Stanley (Stock Quote: MS) and Goldman Sachs (Stock Quote: GS).
Consensus among bank analysts is that the financial institutions should record profits across the board — big profits, if some analysts are viewing their crystal balls accurately. You have to wonder how the public will take the news that giant banks are once again racking up the big dollars. As one late-night comedian said a few nights ago, “Let me get this straight ... the guys profiting from this mess are the ones who got us into this mess?”
Other factors tamping CD rates down include the proposal from the White House to slap $90 billion worth of fees (over 10 years) on banks that accepted TARP money in 2008 and 2009. If that comes to pass, consumers can expect to see even tighter credit markets (the banks will have less money to lend) and higher interest rates on loans (the banks will need the extra revenue to please shareholders).
Then there’s the latest Consumer Price Index numbers, which came in lower than economic policy makers would have liked. With consumer sentiment rising slowly, the Federal Reserve is much less likely to lift interest rates, thus putting a further damper on CD rates.
CD rates, as measured by the BankingMyWay CD Rate Tracker, were mostly up this week, although only slightly so.
Here’s how the CD picture looks from this week to last:
Loan Type This Week Last Week
60-Month CD 2.194% 2.182%
48-Month CD 1.88% 1.878%
24-Month CD 1.344% 1.341%