December 16th, 2008
Today the 30-year treasury bond dropped to below 3% (2.95%) for the first time in history.
The Fed is also poised to lower the target rate for Fed Funds to 0.5%. Some think they might even go lower, but I think they want to leave room for another cut if the economy doesn’t start improving.
6-month CD rates will most likely fall to the 2.00% to 2.50% range. 1-year rates will probably be between 3.00% to 3.50%. The yield curve will probably be somewhat flat on the 2-Year to 4-Year, topping out around 3.70% to 3.80%. Finally the 5-year will probably slip to 4.25% to 4.50%.
One strategy that we have helped people with is investing in low penalty CDs. You may want to consider investing some funds in 5-year CDs, but look for 90-Day Early Withdrawal Penalties. You’ll pick-up some yield over the shorter-term CDs and if rates turn around in the next year or two, it won’t be that expensive to close the CD and move it to one with a better rate.
Hopefully, I’ll have a couple of more posts before the New Year. If not, have a Merry Christmas.
Countrywide Bank has slowed down their first mortage program, but are beginning to offer a Countrywide Reverse Mortgage program. I’m not sure how thrilled I am by that.
-- By +Chris Duncan