BestCashCow Blog

Markets at Inflection Point?

It's great watching all of the stories come in because we get a great sense for what's happening in the market.  This week has been especially interesting.  Problems in the mortgage market created by the near collapse of Fannie and Freddie, the shutdown of Indymac, a bank we have covered on the site, changes in housing legislation, the continued decline in the dollar, and Chairman Bernanke's testimony that he's pretty much helpless to steer this economy. 

It was a week with a lot of problems.  And yet, there is a sense that maybe we are approaching bottom.  After all, can it get any worse than the near insolvency of Fannie and Freddie?  Maybe it can, but let's hope not.  The financials were up 20% today and while it's way to much to think that we are coming out of this crisis anytime soon, perhaps we're reaching a point where we can say we've taken our best shots, are still standing, and can look ahead to better days. 

Savings Rates and CD Rates Fall Sharply

The Federal Reserve made an "emergency" 75 bps cut in the Fed Funds rate on January 22, then followed it with a 50 bps cut at its scheduled meeting on January 30 - its largest decline of the Fed Funds rate in 8 days in more than 20 years and leading to a Fed Funds rate of 3.00%. As a result, Treasury rates and all short term products have had dramatically declining yields.  Savings rates are falling dramatically and CD rates are being withdrawn constantly.  Against the backdrop of significant inflation and a diminution in the real value of the dollar, Americans are increasingly pressed to try to figure out where to stash cash that preserves its value.  No - this is not an endorsement of Ron Paul - it is just the facts.

Short term Treasuries Yields Drop Dramatically As Investors Rush to Safety

Short term treasuries yields has their single biggest 1-day move in 19 years on August 20 with 3 month Treasuries falling under 3%.  The yield curve has now steepened dramatically.  While savings accounts and short term CDs are still offered well above 5%, cash and cash equivalent securities may soon become less attractive.

Fed Cuts Discount Rate by 50 Bps

The Fed cut the discount rate by 50 basis points after markets reeled yesterday and treasury yields fell dramatically.  In spite of the fall in treasuries, Countrywide increased its offering on 3-month, 6-month and 1-year CDs above those offered by its competitors.  E-Loan now has the most compelling 2-year and 3-year CD rates.  Countrywide rates are now just below the Fed discount rate.

Indymac Rates up on CDs and Money Markets

It looks like Indymac just raised the rates on its CD and Money Market accounts.  BankMan on the main BestCashCow site reported that Indymac is offering a 5.55% APY on a 1 year and 5 month CD with a $5,000 minimum balance.  According to our rates charts, these are top rates (BestCashCow does not cover 5 month CDs).  In addition, they have a competitive money market rate of 5.75% APY on balances of $25,000 or more.

As Rates Fall, So too do CD rates

CD rates came down dramatically over the weekend following Thursday and Friday's sharp fall in short term Treasury yields.  Some of the banks that have been quickest to drop their CD offers and savings rates have been very closely tied to the mortgage lending risks - including Countrywide, GMAC and IndyMac.  As always, please visit BestCashCow.com to see the best current offerings.

Fed Leaves Interest rates Unchanged

The Federal Reserve has left interest rates unchanged and indicated that inflation may be moderating.  While inflation risk is no longer described as elevated, the Fed's statement indicated that there is some risk that inflation may not moderate as expected.

An Improved BestCashCow

Today we are very pleased to announce the launch of the new BestCashCow site.  The new site provides you, our users with even more financial information.  But more than that, it gives you the opportunity to participate in making financial news. 

The new site allows you to share links to financial information anywhere on the web and to publish your original content directly on the site.  You can leave comments on content others have posted and rate which submissions you think are the most valuable.  Every member gets their own Profile page which lets others know a bit more about you and your background. 

Some detailed information about these features is available here. 

If you're looking for the rate and product information from the old site, it's still there under the Products and Rates tab.

We hope you like the new site and look forward to your feedback.

BestCashCow

Bond Yields Shoot Higher.

On June 7 bond yields on the intermediate and long ends of the curve spiked higher on news that Bill Gross of PIMCO is no longer bullish on bonds. While equity markets are reacting negatively to the news (higher yields may jeopardize M&A activity), the US yield curve has become uninverted for the first time in 9 months (which many argue is good since an inverted yield curve usually indicates that a weak economy lies ahead).

Fed Minutes From May Leave Market Observers Guessing.

The Fed minutes, which came out May 30, left some market observers believing that the Fed would need to raise rates to move against inflation before the end of the year, while others believe that the Fed's next move will be to lower rates to guard against a housing collapse and stimulate a slowing economy.