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Interest Rates Forecast U.S., Future Interest Rates America, - Google News
©2012 Google

Brazil Rate Futures Drop as Europe Overshadows Retail Sales - Bloomberg
Canada Dollar Has Biggest Weekly Loss in 2012 on Europe - Bloomberg
Housing and Economic Forecast Brightens - MarketWatch (press release)
Jobless Claims in U.S. Were Unchanged at 370000 Last Week - San Francisco Chronicle
Spanish Bank Woes and US Data Hurt Shares - New York Times
Greek political turmoil, chaos for Spain's banks shake eurozone's foundation ... - Minneapolis Star Tribune
Home > News > Are Continued Low Interest Rates Boosting the Economic Recovery? - U.S. News & World Report
BP And Sempra U.S. Gas & Power Announce Plans To Jointly Develop Hawaii Wind Farm - MarketWatch (press release)
Volvo Trucks Unveils 13 Liter Natural Gas Engine for North American Market ... - Sacramento Bee
Deere Posts Record Second-Quarter Earnings Of $1.056 Billion - MarketWatch (press release)

Bond Indexes
Government Bond Indexes:
……30 Year Treasury ^TYX 2.789 [-0.016]
……Treasury Bond Index 000012.SS 133.089 [+0.023]
Corporate Bond Indexes:
……C- Bond Index 000013.SS 152.907 [+0.152]
……Corporate Bond Index 399481.SZ 126.349 [+0.117]
……Dow Jones Corporate Bond Index ^DJCBP 0.00 [N/A]
……Dow Jones Corporate Bond Total ^DJCBT 0.00 [N/A]
Foreign Bond Indexes:
……Chineese Bond CSI Index 000923.SS 135.223 [+0.118]
Municipal Bonds National ETFs:
……SPDR Barclays Capital Municipal Bond TFI 24.19 [+0.04]
……iShares S&P National Municipal Bond MUB 110.97 [+0.04]

Understanding Bank CD Rates
By Steven P. Ross

A Certificate of Deposit (CD) is a pre-fixed yield financial instrument used by banks in the US to accept deposits from US citizens. Understanding Bank CD rates is important for depositors to maximize the return on their investments in bank deposits. Investing a certain minimum sum of money in a bank deposit earns you a certain fixed rate of interest, for a fixed tenure.

Bank CD rates basically depend upon the state of the US economy and are an indicator of its health. The US Federal Reserve periodically fixes a limit on the prime lending rate (PLR) for banks in the US to lend money to people and the business community. The PLR fluctuates periodically based on the health of the US economy.

Banks in the US work under US Federal Reserve guidelines and the PLR cap. They earn money by collecting higher annualized per year (APY) interest rates on loans extended by them than on bank CD rates offered by them. This comparison is based on the same tenure and same initial date consideration for both loans and deposits.

What banks do is to fix the APY rate of interest they collect on loans on the PLR cap fixed by the US Federal Reserve. They are allowed a slight leeway in loan rates subject to the cap so you will find that different banks offer loans at slightly different interest rates for the same tenure loans. They also from time to time revise the loan and deposit rates based on periodic PLR revisions by the US Federal Reserve.

Banks always fix the CD rates a little lower than the loan rates to earn a profit in their business of offering loans and accepting deposits. Here too they are allowed a slight leeway so you will find that different banks offer you slightly different CD rates for same tenure deposits.

Some banks offer comparatively slightly higher CD rates for same tenure and same minimum deposit principals than others to gain an edge in attracting deposits from customers. By doing so they collect more money and so they are able to invest more money especially in corporate loans. Consequently they can potentially earn more profits.

The strategy of banks to offer more APY interest rates on higher tenure deposits is based on the flexibility that they get to use that money to invest in loans fetching them higher rate of interest. The longer the tenure for which you invest your money with banks, the higher the bank CD rates you can get. However, this also is subject to a cap that exists for 5-year and more tenure deposits.

Like all other people your capacity of investing in bank deposits is based on your household income, expenses, and the time horizon of your needs. So, you will find that different people get attracted towards offerings of differing bank CD rates and tenures from various banks. This is because primarily their needs are all different.