Jumbo CD Investments - CD Rates Blog

Fed Cuts Rate by 50 Basis Points

Arguing that the downside risks to the economy continue to to rise, the Fed lowered the rates by another 50 Basis Points.  This brings the Fed Funds rate to 3.00%.  This followed a 0.75% cut on 1/22/08.  As far as I can tell, this is the largest effective percentage cut in history.  The cost of funds has been reduced by 29.4%.

Hank Paulson spoke shortly after the announcement.  He said they are focused first on getting the economy back on track and providing some additional stimulus to help accomplish this. 

The next phase is suggesting some legislation to strenghthen lending practices and not allow the current low rates to create a second housing bubble / credit crisis.

The biggest problem I see though is that they are encouraging spending, more loans, etc., instead of boosting efforts to encourage more saving.  This may be good for the short-term, but I can’t see it being good for the long-term.

I encourage you to sound off.  I would love to get some dialogue going.

Banking Online Article

Posted a new article on the safety of banking online and what to look out for.  Check it out and let me know what you think.

EmigrantDirect Savings Rate - Update 2 - Jan 2008

Updated: 2/12/08.  EmigrantDirect’s saving rates still staks up nicely to others.  Currently at 3.60% APY. 

This savings account works really well. You link the account to another bank account, such as where you do your primary banking, and you can transfer funds between the two accounts on-line.

The FDIC# for Emigrant Bank is 12054. They are over $11.5 Billion in assets.

Here is their website, EmigrantDirect

cd :O)

Highest CD Rates Commentary Updated

Updated our running commentary.

Highest CD Rates

cd :O)

Fed Funds Rate - Hysterical (or Historical)

Trying to track down the data for historical Fed Funds rates has been fun.  Here are a couple of links for you:  Fed Reserve back to 1954 and Fed Reserve back to 1990.

As you may have read, Tuesday’s drop was the biggest since October 1984.  At that time it was dropped about 1.25%, from 11.30% to 9.99%.  There was also another drop of about 1.00% in December.  Rates went from 9.43% to 8.38%. 

Reading deeper than the numbers, the actual effect of the drop is interesting.  The October drop was about 11.6%.  The December was about 11.1%.  The first January 2008 drop (there may be a second one, they are saying) was a 17.6% drop.  So our 2008 cut was much larger as a percentage.  However that still isn’t the largest % drop.  June 2003 was pretty high when it went from 1.25% to 1.00%.  That was a 20% drop.  The award so far goes to November 2002.  It went from 1.75% to 1.25%, a 28.6% drop.

If the Fed does drop rates again next week hysteria, I mean history, may truly be made.  If they drop a quarter, that will be a 23.5% drop in a single month.  If they drop .50%, that will be 29.4%. And then Janaury 2008 will be the new winner.

I invite you to dig into the above links and let me know what you find.

cd :O)