Certificate of deposit rates remain relatively flat this week, for the second straight week in a row.
There was some thought among Wall Street-watchers that the U.S. Securities and Exchange Commission’s fraud charges against Goldman Sachs (Stock Quote: GS) would force investors into the “safe haven” of the bond market.
While the news did send the stock market down, with the Standard & Poor’s 500 Index down 2% last Friday and the VIX volatility index spiking upward by 24%, things settled down on Monday. Yesterday’s session saw a 0.45% rise in the S&P 500, suggesting that either Wall Street doesn’t think the government has a case against Goldman Sachs, or it does, but it won’t mean much as the so-called economic recovery casts a huge shadow over the financial markets.
In fact, one could make the case that the larger issue impacting CD rates was news from the Conference Board that its index of leading economic indicators was up last month by 1.4%. That’s the 12th straight month we’ve seen a rise in the Conference Board Index, indicating a slow recovery, but a recovery nonetheless.
It’s no coincidence that the index’s key ingredient is the U.S. stock market, which has risen 79% during the past 13 months, roughly the same upward period marked by the Conference Board numbers.